Introduction

Welcome & Introduction
Ian Fraser, Brammer plc,
Chief Executive
Intellectual Property Notice
The trademarks, logos and other registered marks of BRAMMER including,
but not limited to, the “BRAMMER” “INSITE” and “GENIE” trademarks and
logos, are the exclusive property of BRAMMER, and may not be used or
reproduced without BRAMMER’S prior written consent.
Corporate Team
Ian Fraser
Chief Executive
Paul Thwaite
Finance Director
Chris Short
Corporate
Development
Director
John Veale
Consultant
Country Managing Directors
Ian Ritchie
UK
Julien Monteiro
France
Jochen Diehm
Germany
Neil Rogers
Regional Managing
Director
Functional Directors
Nigel Trend
Business Integration
Ralf Hellwig
Key Accounts
Carl-Friedrich
Wayand
Purchasing
Jakob Alkil
Group Strategy &
Growth
Philippe Hervieux
Tools & General
Maintenance
Group Results - 2011
• Turnover increased by 22.0% with strong organic
growth of 15.6% driving results
• Acquisition of Buck & Hickman on 30 September
contributed £26.5m to turnover and £0.9m to
operating profit
• Profit before tax* of £29.0m – up 40.8%
• £28.9m operational cash generated, 91% of
operating profit*
• Basic eps* up from 13.9p to 19.8p (42.4%)
• Final dividend: 5.7p per share (increase of 26.7%)
* all stated before amortisation of acquired intangibles and exceptional
items
About Brammer
•
European market leader - with less
than 2% market share
•
Focused product range in
mechanical MRO components - a
€40 billion + market
• Bearings
• Mechanical Power Transmission
• Fluid Power
• Tools and General Maintenance
• Added value services
About Brammer
•
Leading the process of consolidation
in a highly fragmented market
•
Diverse customer base of over
100,000 customers
•
Customer risk is low
•
Largest European customer of our
main strategic suppliers
About Brammer
• 3,178 people
About Brammer
• 3,178 people
• Over 300 locations
About Brammer
• 3,178 people
• Over 300 locations
• In 16 countries
across Europe
About Brammer
• 3,178 people
• Over 300 locations
• In 16 countries
across Europe
• With over 3,500,000
products from the
world’s leading
suppliers
About Brammer
• 3,178 people
• Over 300 locations
• In 16 countries
across Europe
• With over 3,500,000
products from the
world’s leading
suppliers
• Working in your
industry
Buck and Hickman
•
•
•
•
•
•
£105 million revenues
£3.2 million EBITDA
Expertise in Tools and General Maintenance
15,000 customers – most new to Brammer
540 people
Creates leadership position in UK - >£300 million of revenues in
2012
• Turbo boosts European T & GM growth – in a market of at least
€20 billion
• Entirely consistent with strategy
• European Product Division for T & GM created
Brammer – Our Strategy
Growth
Capability
Costs
Synergies
Country organic
growth
People
Development
Supplier
Rationalisation
Business Best
Practice
Key Accounts
Business Skills
Development
European Buying
Systems
Integration
Insites
Distributed
Learning
Programme
Development
IT and Other Cost
Reductions
Brand
Development
Product range
extension
Internal
Communications
and Involvement
Capital Employed
Management
Supplier
Relationship
Management
Geographical
development
Growth Objective
The Market Opportunity
Bearings
2.0 bn
MPT
5.0 bn
> €40 bn
T&GM+PPE
25.0 bn
Fluid Power
10.0 bn
The results of our Growth
Strategy
Sales per Working Day - Growth
%
2007
2008
2009
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
Q4-11
YTD-11
UK
12.5%
8.3%
-0.4%
5.4%
6.1%
11.7%
9.0%
15.6%
17.4%
17.7%
16.6%
16.8%
Germany
17.4%
8.1%
-30.8%
-6.5%
18.1%
24.5%
22.7%
22.8%
21.1%
14.2%
6.9%
16.1%
France
8.6%
9.4%
-14.6%
4.1%
14.9%
13.2%
12.7%
12.8%
18.0%
13.9%
12.1%
14.2%
Spain
6.7%
8.3%
-22.3%
0.3%
14.0%
9.4%
15.1%
14.6%
14.2%
12.6%
7.6%
12.3%
Netherlands
18.5%
11.4%
-16.6%
3.5%
13.8%
8.5%
15.7%
16.9%
19.5%
16.8%
15.8%
17.2%
-
-
-
-1.2%
27.7%
24.9%
27.4%
32.9%
17.8%
18.0%
29.1%
24.1%
Total
20.3%
12.0%
-16.1%
-0.1%
14.3%
18.0%
15.7%
17.8%
18.3%
15.2%
35.9%
21.8%
Organic
13.6%
8.5%
-16.1%
-0.1%
14.3%
18.0%
15.7%
17.8%
18.3%
15.2%
12.5%
15.9%
Poland
Our performance - 8 Year History
£m
2004
2005
2006
2007
2008
2009
2010
2011
Turnover
270.8
287.4
314.3
379.6
478.4
426.1
468.4
571.5
GP%
30.1%
30.9%
30.5%
30.4%
30.0%
30.1%
30.1%
30.3%
TP
9.8
12.5
15.1
19.9
26.2
18.4
23.0
31.8
TP%
3.6%
4.4%
4.8%
5.2%
5.5%
4.3%
4.9%
5.6%
Operating cash flow 18.7
15.7
11.9
16.7
29.2
33.3
27.5
28.9
Net Debt (€ equiv)
Total Customer
Signed off Cost
Savings
80.7
73.7
80.4
80.9
86.8
44.9
42.8
42.1
0.4
2.6
8.8
15.1
15.0
25.8
30.0
34.9
Total
156.7
181.9
Distributor Supplier Landscape
North America
Power Transmission/Fluid Power
•
•
•
•
Motion
AIT
Kaman
BDI
$4.0 bn
$2.3 bn
$1.0 bn
$0.6 bn
Industrial Products
•
•
•
•
Grainger
Fastenal
MSC
Airgas
$8 bn
$3 bn
$2 bn
$4.5 bn
Distributor Supplier Landscape
•
•
•
•
North America
Europe
Power Transmission/Fluid Power
Power Transmission/Fluid Power
Motion
AIT
Kaman
BDI
$4 bn
$2.3 bn
$1.0 bn
$0.6 bn
•
•
•
Industrial Products
•
•
•
•
Grainger
Fastenal
MSC
Airgas
$8 bn
$3 bn
$2 bn
$4.5 bn
Brammer
Eriks
Others
$1.1 bn
$0.9 bn
< $0.5 bn
Industrial Products
•
•
•
Dexis
Orexad
Fabory
$0.5 bn (?)
$1.0 bn (?)
$0.3 bn
Brammer Positioning
• Bearings, PT, Fluid Power specialist
• Tools, general maintenance, health and safety, PPE specialist
• Hence – European Product Division, Tools and general
maintenance
The European Market
• Larger players enjoy economies
of scale so will grow faster than
the market
•
•
•
•
•
•
•
IT
Marketing
Purchasing
Operations and business processes
Branch network will remain important for
foreseeable future
Smaller distributors will be forced into
niches
Local service will remain important
The European Market
•
Market is being redefined by customers
and suppliers
•
•
•
•
•
Bearings
Mechanical Power transmission
Fluid Power
Industrial Products
Ability to supply a wide product range is
becoming increasingly important
Factors Influencing Choice Of Supplier
Q18. Please allocate 100 points across the following factors to indicate their
importance when choosing a supplier of industrial engineering products?
Total
AT
BE
CZ
FR
DE
HU
IT
NL
PL
ES
UK
Product availability, delivery &
28.3 31.8 26.2 23.2 29.1 29.9 19.4 29.9 23.6 27.4 28 28.9
security of supply
Product quality and well
23.3 20.8 17.6 22 24.8 22.3 20.2 26.2 16.1 28.5 26.1 21.3
known brands
Price & payment terms
13.1 18.1 15.8 23.1 13.7 13.7 16 16.2 12.4 15.4 10.4 11.4
Technical & operations
support/advice
11.5 10.4 13.3 8.3 11.7 10.4 7.6
Product range
Purchasing and sales
support/advice
Ease of doing business on a
daily basis (inc. online
transactions)
Understanding and acting on
your future business needs
9
12.7 10.7 13.8 9.2
8.5 6.1 8.3 9.8 7.1 9.2 9.7 5.7 11.6 4.8 8.6
6.1 5.1
9
6.4
6
4.6 5.3 5.4 9.8 4.8 5.5 6.8
5.3 4.1 5.8 4.6 4.2 6.5 14.3 4.7 7.9 4.3 3.5
3.8 3.7
4
10
2.6 3.4 3.4 7.6
3
8
4.9 4.2 3.9 4.4
Base: 1381
The European Market
•
Barriers between specialist distribution
networks are melting away – but a degree
of specialisation remains a vital
component of strategy
•
Customers are seeking REAL added
value – this means hard currency savings
•
Many customer seeking pan-European
pricing
•
Many customers expect supplier to
provide significant information feedback
The European Market
• Major part for the
manufacturer to play in
tripartite agreements
• Brands remain very
important - especially
bearings
Where Branded Products Are Important
Q17. For which parts/products is a highly recognised brand more important to you?
Total
AT
BE
CZ
FR
DE
HU
IT
NL
PL
ES
UK
Total
845
16
26
16
236
96
7
31
60
17
199
140
Bearings
91% 100% 85%
94%
93%
80%
86%
90%
93% 100% 92%
93%
Belts & pulleys
54%
50%
65%
25%
69%
43%
57%
32%
60%
41%
46%
51%
Pneumatics
50%
38%
69%
0%
56%
47%
43%
58%
47%
59%
52%
45%
Motors
50%
56%
62%
38%
42%
43%
0%
61%
52%
24%
60%
55%
Gearboxes
47%
63%
58%
25%
55%
40%
29%
3%
40%
6%
51%
51%
Chains & sprockets
45%
25%
62%
13%
57%
26%
29%
32%
45%
53%
38%
52%
Linear motion parts
41%
31%
38%
13%
53%
46%
29%
39%
28%
35%
35%
38%
Seals
40%
38%
27%
38%
48%
49%
29%
10%
45%
47%
34%
37%
Hydraulics
39%
63%
31%
25%
42%
40%
43%
32%
30%
35%
39%
36%
Clutches & couplings
37%
38%
42%
19%
47%
43%
14%
16%
43%
47%
21%
40%
Tools
34%
31%
42%
19%
38%
28%
29%
23%
48%
35%
28%
36%
Maintenance products
33%
31%
54%
31%
29%
25%
29%
23%
48%
35%
32%
41%
Health & Safety products 20%
19%
27%
0%
17%
15%
0%
16%
40%
12%
17%
26%
Base: 1381
The European Market
• E-commerce is becoming
an essential requirement
• Ability to provide
information back to the
customer likewise
E-Commerce
How would you describe your desire for an e-commerce website from Brammer to allow you to purchase products
online?
UK
8%
Spain
Netherlands
59%
34%
14%
63%
11%
Italy
56%
33%
24%
Germany
57%
32%
France
15%
0%
23%
19%
38%
31%
58%
20%
It is important
40%
26%
60%
It would be nice to have
80%
No desire
100%
The industry is
consolidating…………………
and consolidation favours the
market leader…………………
…...…..but only if you have
the right strategy!!
Strategies in Fragmented
Industries – Michael Porter
•
MRO supply is a hugely fragmented
industry
•
Fragmentation can be overcome
–
–
–
–
•
Create economies of scale
Purchasing
Marketing
Business processes – “formula
facilities”
Tightly managed decentralisation
– Formula facilities
– Tight control and performance
compensation for local managers
Strategies in Fragmented
Industries – Michael Porter
•
Make acquisitions for critical mass
–
–
–
–
Transfer synergy benefits
Purchasing
Marketing
Business processes
•
Respond to industry trends early –
e.g. value proposition and Key
Accounts
•
Increase added value – value
proposition
•
Specialsiation by customer type –
attacking “defensive” segments