Merrill Lynch Conference
13 – 15 March 2017 Group revenue and operating profit split – September 2016 2
Revenue (R66.5bn) Operating profit (R4.1bn)
55% 44%
56% 45%
Automotive and Logistics Equipment and Handling
Merrill Lynch Conference Divisional overview
Equipment southern Africa Equipment southern Africa – operational update 4
. Order book of R1.7bn at end Jan 2017 (Sept 2016: R1.3bn) . Increase in mining and contract mining activity as commodity prices continue to improve . DRC: Major mining customer has indicated intent to resume mobilising a portion of mining fleet . Aftermarket activity remains resilient . Stronger Rand impacting Dollar translation
Order book (Rm)
Southern Africa
0 1 000 2 000
Jan 2017 Sept 2016
Merrill Lynch Conference Southern Africa sales history 5
Rbn
25
20
46% 50% 15 41% 33% 56%
28% 10 36% 34%
30% 46% 5
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Equipment sales Product support
Merrill Lynch Conference Southern Africa revenue profile by line of business – September 6
2016 2015
5% 5% 8% 6%
31% 39%
50% 56%
New equipment Product support Used equipment Rental
Merrill Lynch Conference Southern Africa new equipment sales by industry – September 7
2016 2015
4% 4%
13% 15% 29%
40%
52% 43%
Mining Construction Power Contract mining
Merrill Lynch Conference Commodity price movement 8
. Upswing in coal and iron ore prices signalling positive global mining recovery . Improved oil price sustainable due to OPEC production cuts . Recent jump in Cu prices buoyed by production reaching plateau
Copper, Coal & Iron ore Platinum & Copper
160 9 000
USD 140 8 000
120 7 000 6 000 100 5 000 80 4 000 60 3 000 40 2 000 20 1 000 - - 2 013 2 014 2 015 2 016 2017M01
Coal Crude oil Iron ore Platinum Copper
Source: Global Economic Monitor (GEM) Commodities
Merrill Lynch Conference Commodity mix - mining unit sales by commodity - 2012 - 2016 9
Glencore Exxaro COAL South 32 Vale
Mopani Copper Palabora Copper Manganese Platinum COPPER Vedanta DML Other 2% 2% Barrick FQM 7% Rental Namdeb 14% DeBeers Iron Ore DIAMONDS Petra Debswana 5% Catoca Gold Uranium 4% 1% GOLD B2Gold Gold One Zinc Diamonds 2% Sishen 13% IRON ORE Khumani Kolomela
MANGANESE South 32
PGM Coal PLATINUM Impala Anglo Platinum 25% Copper 13% URANIUM Rossing Uranium Swakop Uranium Contractors 12% Skorpion ZINC Rosh Pinah
Merrill Lynch Conference Surface mining project outlook 10 Coal PGM / Zinc / Manganese Diamonds Uranium Iron Ore
Debswana – Orapa Cut 3 (2020) Chitotolo / Catoca (2017) - Complete Vale – Moatize Expansion (2017/18)
Debswana – Jwaneng Cut 9 (2019) ICVL – Minas Benga (2017)
Valencia (Norasa) – (2020) Coal of Africa – Makhado (2018)
Avel Moolmans – Sishen - (2017) South 32 – Wwk (2017)
Tshipi Borwa (2019) ResGen – Boikarabelo (2018-2019)
Sekoko – Waterberg (2017) Transhex – Namakwa Diamonds (2018)
Glencore-Shanduka (2017) - Complete Glencore – Zonnebloem (2018)
Glencore - Makoupan Project (2017) Vedanta Gamsberg (2017) Foskor (2017) – Complete Exxaro – Belfast Project (2019)
Merrill Lynch Conference Underground mining project outlook 11
Coal PGM /Zinc/ Manganese Copper Chrome Gold Diamonds
Konkola Copper mines (2017 - 2020) Platreef Project (2019-2021)
DRC ANGOLA MALAWI Glencore Mopani (2017 - 2020) Palabora Copper (2017 - 2021) ZAMBIA
Venetia Underground Mine ZIMBABWE MOZAMBIQUE (2020 – 2021) Hernic Ferrochrome (2019) NAMIBIA
BOTSWANA B2Gold Wolfshag (2019 - 2020) Sasol Longwall (2020)
PGM Maseve (2017 - 2018) LESOTHO SOUTH Kgalagadi Project (2017 - 2020) AFRICA
Assmang Black Rock (2017-2019)
Merrill Lynch Conference South Africa - significant orders received 12
. Significant rise in the number of enquiries from contract miners
. May signal an increase in mining activities in the near future
. Orders received
. WBHO (R45m): A total of 6 units, mainly Cat CS533E Vibratory Soil Compactor & Motor Graders construction type of equipment. (6x140k, 4x 336D2L, 2x CS533E, 1x CS78B, 2x232D)
. Andru Mining: 20x OHT (10x 777’s and 10x 773’s)
. Foskor: 4x 789’s. We have managed to place equipment in this mine where it was previously only competitor equipment. This is a significant milestone.
. Exxaro: 8x 777 OHT (2 in Grootegeluk and 6 Off Highway Trucks (OHT’s) for Andru Mining & Exxaro in Leewpan mine)
Merrill Lynch Conference DRC update 13
. More positive outlook for 2017 than prior year
. Glencore indicated that they going to invest further in their operations in DRC
. Increase shareholding in Katanga Mining
. Katanga ore leach processing plant to be completed in second half of 2017
. Increase in on site presence at Katanga mining by approximately 120 people by end of 2017
. Large increase in component replacement expected in the following 18 months
. Joint Venture will benefit from:
. Cost restructuring that took place in 2016
. Increased customer base
Merrill Lynch Conference Divisional overview
Equipment Russia Equipment Russia – operational update 15 . Order book of $56.2m at end January 2017 (September 2016: $21.1m) . Commodity prices, specifically coal, showing signs of recovery – increase in tender activity
. Inflationary pressure on operating costs due to strengthening rouble
. Capitalise on mining greenfield opportunities driven by improvement in commodities . Protect and grow aftermarket revenues through technology and customer fit solutions . Stronger Rand impacting Dollar translation
Order book ($m)
Russia
0 20 40 60 Jan 2017 Sept 2016
Merrill Lynch Conference Russia sales history 16
$m
600
500 33% 27%
400
28% 46% 300 51% 25% 61%
200 36% 24% 29%
100
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Equipment sales Product support
Merrill Lynch Conference Russia revenue profile by line of business – September 17
2016 2015
1% 4% 1% 4%
34%
43%
51% 61%
New equipment Product support Used equipment Rental
Merrill Lynch Conference Russia new equipment sales by industry – September 18
2016 2015
13% 8% 5% 4%
8% 18%
7%
59% 68% 10%
Mining Construction Power Oil and gas Other
Merrill Lynch Conference Current mining opportunities 19
Gross Kekura AS Siyaniye (Kupol) 1xD6R 1x725C 37 units 2x745 2x745 1xTH514 $21m (2018) $0.9m $0.9m Polyus 1x950GC Muna
34x793 / 2x785 / 6x777 / 4x773 1xD6R 37 units
$117m prime + $24m aftersales (2018) $0.3m $1.2m $47m (2018)
ZDK Pavlik
2x777D
1x16M3
Norilsk Nickel $2.7m
2xR1600 4xR1600 6xR1700
1xR1300
1xPM102 GV Gold Ugakhan $2.3m $2.7m $5.2m 1x6018 1xD9R
5x777G 1xD6R
Sovrudnik $8.7m
1xM16
$0.9m
Bystrinsky
RUSAL 4x789D 8x789D
4x777G 2x777G $9.3m $18.6m
$3.4m $1.7m
Vasilievsky Rudnik Delivered 2xD6R 12x773E Firm Orders 2xD9R
Greenfields / Major Projects $1.8m $7.5m
Merrill Lynch Conference Bystrinsky greenfield success 20 Prime Product . Contract signed in December 2016 for 12 CAT 789D mining trucks: • Delivery in 2017 • 4 units shipped in January 2017 • Deal Value: $28m • Future prospects for up to 20 more CAT 789D’s
. Additional equipment under negotiation: • 2 CAT 6030 FS Concentrator complex • 2 CAT 992K • 1 CAT 16M
Site service agreement – under negotiation . Parts – on site parts warehouse . Service - 24 hours a day, 7 days a week . Project Manager appointed . Health monitoring and oil sampling Mine workshop
Merrill Lynch Conference Polyus package deal success 21 Mining Truck order: . Confirmation letter received from Polyus in Feb 2017: • 34 CAT 793D’s - 2018 delivery • 6 CAT 777G’s - 2017 delivery • 2 CAT 785C’s - 2018 delivery • 4 CAT 773E’s - 2017 delivery
• Total Deal Value: $141m of the following: o Parts and tooling: $24m o Machines: $117m
Future prospects: . Up to 15 more CAT 785D’s in 2018-2020
Training and Support Deliverables: . Parts – on site parts warehouse . 24 Major components valued at $3.7m . Immersive Simulator . Preventative maintenance bay for 2 trucks
Merrill Lynch Conference Divisional overview
Equipment Iberia Equipment Iberia – operational update 23 . Spanish economic growth driven by buoyant tourism sector, but is not translating into increased activity in the segments served . Machine industry in Spain shows growth but concentrated in small equipment . Power systems co-generation repowering opportunity in medium term . Marine and Digital capabilities development remains key driver for future growth . Order book growth driven by new machines orders . Focus on cost management and improved efficiencies
Order book (€m)
Iberia
0 20 40 Jan-17 Sep-16
Merrill Lynch Conference Iberia sales history 24
€m
900
800 30% 700 30%
600
500
34% 400 33% 40% 37% 35% 300 41% 44% 44% 200
100
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Equipment sales Product support
Merrill Lynch Conference Iberia revenue by line of business – September 25
2016 2015
3% 3% 12% 16% 37%
41%
44%
44%
New equipment Product support Used equipment Rental
Merrill Lynch Conference Iberia new equipment sales by industry – September 26
2016 2015
4% 2%
44% 46%
52% 52%
Power Mining Construction
Merrill Lynch Conference Divisional overview
Handling Handling - Operational update 28
. Agreement to dispose of Handling and Agriculture SA assets into 50/50 JV with BayWa at NAV
. Trading as BHBW (Pty) Ltd with effect from 1 March 2017 following approval by competition authorities
. Will continue as the exclusive southern African dealer of Hyster and UTILEV lift trucks and warehousing equipment.
. Will continue as the exclusive southern Africa dealer of AGCO products, Massey Ferguson and Challenger
. Extended offering in the agriculture value chain is planned
. R297m net proceeds received end February 2017
. Joint venture to be equity accounted from 1 March 2017
Merrill Lynch Conference Divisional overview
Automotive Automotive - operational update 30
. Record result in a challenging trading environment
. Revenue R31.4bn (2015: R28.7bn) – up 9.5%
. Operating profit R1 654m (2015: R1 529m) – up 8.2%
. Operating margin for the year maintained at 5.3%
. Strong used vehicle profit contribution
Operating profit (Rm) Margin
+14% 9.0% Car Rental 9.1%
-2.1% 15.4% Avis Fleet 17.0% +15% 2.6% Motor Trading 2.4%
0 100 200 300 400 500 600 700 Sept 2016 Sept 2015
Merrill Lynch Conference Integrated business model delivers value 31
. Well balanced Automotive portfolio provides resilience
. Revenue CAGR of 11% delivers operating profit CAGR of 16%
. Inter-business unit synergies continue to deliver value
. Targeted capital allocation supports value creation
. Recently acquired businesses performing in line with expectation
Operating profit Rm Operating profit by BU Rm 1800 1800 1500 1500 1200 1200 900 900 600 600 300 300 0 0 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Operating profit 1H Operating profit 2H Car Rental Motor Trading Avis Fleet
Merrill Lynch Conference Car Rental 32
. Sustained growth in rental days
. Pleasing revenue per day increase
. Fleet utilisation maintained at 75%
. Strong used vehicle profit contribution
. Customer satisfaction remains above 90%
. Maintain market leadership
Car Rental YTD Jan’17 FY’16
Rental days +4.2% +3.8%
Rental revenue per day +2.4% +5.4%
Merrill Lynch Conference Avis Fleet 33
. FY’16 financed fleet negatively impacted by Lesotho contract
. Return to finance fleet growth in 2017
. Customer retention rates remain high
. Net reduction in OEM maintenance plans due to lower new vehicle sales
. Reduced fleet terminations impact used contribution in FY’16
. Positive start to this year with strong contribution from used
. Economic environment impact certain African countries
Avis Fleet YTD Jan’17 FY’16
Finance fleet +1.0% -2.4%
Under maintenance -3.8% -2.3%
Merrill Lynch Conference Motor Trading 34
. Focused dealership footprint – “Fewer, Bigger, Better” Strategy continues
. New vehicle market remains under pressure
. Recent acquisitions support result:
. Two Mercedes-Benz dealerships (1 Mar 2016)
. Majority share in SMD (1 May 2016)
. Positive contribution from aftermarket revenues
. Maintained market share
Motor Trading YTD Jan’17 FY’16 New unit sales -10% -6.4% Parts revenue +10% +13% Service hours +6.0% +0.6%
Merrill Lynch Conference Motor Retail 35
Total market forecast for 2017 calendar year: Growth of 2.5% - 3.5%
Total South African Vehicle Market 900 800 700 600 500 400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Passenger LCV M&HCV Forecasts and information by Dr. Neal Bruton
Merrill Lynch Conference Automotive – outlook 36
Car Rental . Volume and revenue per day increases expected to deliver top line revenue growth, supported by the dual brand strategy . Productivity, fleet utilisation and cost focus will maintain strong return on equity . Continued positive contribution from used vehicle disposals
Avis Fleet . Well positioned for continued organic growth . Maintain market leadership position and continue to achieve strong return on equity . Awaiting outcome of large contract renewals
Motor Trading . Challenging trading conditions to continue, impacting overall margins . Under-performing dealerships and franchises under review . Recent acquisitions to contribute positively to revenue and profitability
Automotive . 2017 revenue outlook range of R33bn to R34bn (2016: R31.4bn) Division
Merrill Lynch Conference Divisional overview
Logistics Logistics - operational update 38
. Trading ahead of last year . Benefit from full financial impact of new contracts and acquisitions . Leveraging investments in Smartmatta, KLL Group and Aspen acquisitions . Diversifying and extending service offerings
Merrill Lynch Conference Diverse blue chip customer base 39
Merrill Lynch Conference Merrill Lynch Conference
13 – 15 March 2016