| 2022 US $'million | 2021US $'million | Changes | |
|---|---|---|---|
| Revenue | 7,034 | 6,394 | +10.0% |
| Gross profit margin | 39.1% | 38.6% | +50bps |
| EBIT | 633 | 572 | +10.7% |
| Profit attributable to Owners of the Company | 578 | 524 | +10.4% |
| EPS (US cents) | 31.59 | 28.62 | +10.4% |
| Interim dividend per share (approx. US cents) | 12.23 | 10.94 | +11.8% |
We are pleased to announce that TTI delivered strong results for the first half of 2022, outpacing the
market
and growing sales by 10.0% to US$7.0 billion. In local currency, sales grew 12.1%. Combined with our
2021
first half sales growth of 52%, TTI has increased sales by 67% over this two-year period. Gross margin
improved for the 14th consecutive first half expanding 50 bps to 39.1%. EBIT increased 10.7% to US$633
million, net profit rose 10.4% to US$578 million, and earnings per share increased 10.4% to
approximately
US31.59 cents per share.
We are delighted that all of our geographic regions delivered solid sales growth in the first half. Rest
of
World featuring Australia and Asia delivered outstanding 23.0% growth in local currency. Europe grew
14.1%
in local currency and North America grew 10.5% in local currency.
Our leadership Power Equipment business delivered a very strong first half, while Floorcare contracted
due
to slowing demand and customer destocking. Now the global leader in professional cordless, our flagship
MILWAUKEE business continued to flourish with 25.8% local currency sales growth in the first half. This
business now accounts for a major part of
the company sales with an accretive gross margin. We remain confident that our MILWAUKEE business will
continue to outpace the market in the second half of 2022 and the years to come.
We have adjusted the investment plans in our DIY/Consumer businesses to reflect the current challenges
in
the market, while continuing to develop exciting new products. Our focus here will be inventory
reduction,
working capital management, and ensuring we have the right overhead structure in place. These businesses
continue to outperform the market globally.
New product development remains a cornerstone of our past success and our future. We will continue to
invest
in breakthrough cordless technology, generating hundreds of new cordless products in the years to come.
In
addition, we are developing many other high potential new businesses, such as the MILWAUKEE Personal
Protective Equipment (PPE) product line, that will catalyze even more growth in the future.
Capex spend for the first half was US$229 million, lower than last year by 6.4%. This spend includes
investments in new product, sustainability, and capacity expansion in Vietnam and the United States. We
look
forward to the opening of the industry’s first battery powered mower manufacturing facility in South
Carolina, USA in Q3 2022.
Working capital as a percent of sales finished at 23.3% versus 18.3% at the end of the first half of
2021.
We reduced finished goods inventory by 3 days on hand to 115 days, and we are targeting additional
reductions in the second half of 2022. Raw material/Component inventory grew 6 days to 20 days on hand
as we
increased strategic component levels, allowing us to maintain high service levels to our customers while
enduring an increase in supply chain lead time.
Our outstanding first half performance is the result of our ongoing new product flow and our market
leadership position. We will continue to execute our proven strategy of investing in demonstrably
better,
technologically advanced new products to drive our growth. Our new product flow has allowed us to
consistently outperform the market and deliver strong financial performance year after year. While the
market conditions have become more challenging for the DIY/Consumer businesses, we are on track to
outperform the market in the second half of 2022.
The TTI Power Equipment segment delivered sales growth of 14.9% in local currency to US$6.6 billion. All geographic regions delivered exceptional sales growth in the first half.
MILWAUKEE M18 Cordless System
MILWAUKEE M12 FUEL ½” Hammer Drill/Driver
In the first half of 2022, we expanded our MILWAUKEE M18 and M12 cordless leadership systems with
products attacking new verticals and next-generation innovations. With the addition of the M18 FUEL
utility fencing stapler and the Generation 4 M18 FUEL 1⁄2” drill driver/hammer drill, the M18 system
now
contains 259 products. In the subcompact space, the MILWAUKEE M12 system leads the industry with 144
products. In addition, the MILWAUKEE MX FUEL system continues to perform well, with 13 products
attacking the vast light equipment market.
We have also continued to rapidly expand our lineup of Personal Protective Equipment (PPE) with the
launch of the MILWAUKEE BOLT hard hat system. These hard hats and helmets offer superior protection
from
falling objects versus the competition, and the BOLT system introduces a line of 35 interchangeable
accessories that allow users to customize their safety equipment to their specific jobsite needs.
The
MILWAUKEE BOLT system is yet another example of breakthrough innovation that has been well received
in
the market.
Now with 65 fully interchangeable products, the MILWAUKEE PACKOUT system is meeting the growing tool
transportation, organization, and storage needs of end users. With the launch of over 20 PACKOUT
Shop
Storage solutions, users will now be able to fully customize their storage needs with wall plates,
tool
racks, tool holders, and a cabinet.
Our DIY/Consumer Power Equipment business grew low single digits in local currency. The RYOBI
Power
Tool business delivered strong results across all regions in the first half of 2022, while the
RYOBI
Outdoor business outperformed the overall market despite being impacted by unfavorable weather
conditions.
RYOBI is the global leader in DIY cordless, featuring 162 tools, 84 outdoor products, and 21
cleaning products in the 18V ONE+ battery system. We are excited about the future of this
business,
and will continue to enhance our cordless DIY leadership position with the launch of a stream of
innovative new products.
We also continued to extend our leadership position in the global Outdoor battery-powered market
with the launch of the RYOBI 80V HP Zero-Turn Riding Mower. With patented IDRIVE joystick
control
technology, this rider contains breakthrough innovation setting a new standard for riding mower
control and maneuverability. We also launched a stream of new powerful RYOBI 40V products
including
self-propelled walk-behind mowers, WHISPER quiet blowers, and chainsaws to name a few. With
these
recent additions, the RYOBI 40V system now contains 81 innovative products that meet or exceed
petrol performance levels.
RYOBI 18V ONE+ Family
Introducing RYOBI’s first lithium-ion battery powered zero turn riding mower, it features the revolutionary IDRIVE system that uses an intuitive one-handed joystick steering to maneuver around objects more easily than a traditional ZTR.
Delivering 650 CFM and 160 MPH, this blower can tackle wet and dry leaves. It is 85% quieter than a gas blower, giving you all the power without the noise.
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Our Floorcare and Cleaning business was impacted by a reduction of COVID-related demand, leading to a decline in sales of 17.8% to US$472 million in the first half of 2022. We have taken aggressive short-term actions to reduce overhead and to reduce inventory levels, while continuing to develop new products for the future.
HOOVER ONEPWR Cordless System
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We are pleased with the outstanding progress we are making towards lowering the carbon emissions footprint of our facilities worldwide. Additionally, we are committed to continue launching a series of new cordless sustainable products that reduce emissions, noise, and improve safety.
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We look forward to the future with confidence as we continue to attack the market with hundreds of exciting new products while we maintain our focus on operational excellence. Our world-class team is well prepared to manage the business through challenging macroeconomic environments and continue to deliver above market results. We are well positioned to strengthen our leadership position in the months and years to come.
Reported revenue for the period grew by 10.0% as compared to
the same period last year, amounting to US$7,034 million. Profit attributable to Owners of the
Company amounted to US$578 million as compared to US$524 million reported in the same period
last
year, an increase of 10.4%. Basic earnings per share was at US31.59 cents (2021: US28.62 cents),
an
increase of 10.4%.
EBIT amounted to US$633 million, an increase of 10.7% as compared to the US$572 million reported
in
the same period last year.
Gross margin improved to 39.1% as compared to 38.6% reported in the same period last year. The margin improvement was the result of new product introduction, product mix, category expansion, improvements in operational efficiency and supply chain productivity together with very effective action plans to navigate global supply constraints, commodity headwinds and logistic costs increase.
Total operating expenses for the period amounted to US$2,122 million as compared to US$1,900
million
reported for the same period last year, representing 30.2% of revenue (2021: 29.7%). During the
period under review, R&D spent at 3.3% of revenue (2021: 3.1%). We will continue to invest in
breakthrough technology and deliver broad base end-user products and categories as these are
most
critical not only to maintain sales growth momentum but also
margin expansions.
Net interest expenses for the period amounted to US$11.3 million as compared to US$8.6 million
reported for the same period last year, representing 0.2% of revenue (2021: 0.1%). Interest
cover,
expressed as a multiple of EBITDA to total interest was at 36.7 times (2021: 30.8 times).
Effective tax rate for the period was at 7.0% (2021: 7.0%).
Total shareholders’ funds amounted to US$5.0 billion, an increase of 6.9% as compared to December 31, 2021. Book value per share was US$2.75 as compared to US$2.57 at December 31, 2021, an increase of 7.0%.
The Group continued to maintain a strong financial position. As at June 30, 2022, the Group’s
cash
and cash equivalents amounted to US$1,274 million (US$1,874 million at December 31, 2021) after
the
payment of US$236.1 million dividend during the period (US$193.5 million in first half 2021), of
which 34.2%, 28.3%, 13.2%, and 24.3% were denominated in RMB, US$, EUR and other currencies
respectively.
The Group’s net gearing, expressed as a percentage of total net borrowings (excluding bank
advance
from factored trade receivables which are without recourse in nature) to equity attributable to
Owners of the Company, was at 40.5% as compared to 14.8%
as at June 30, 2021.
Long term borrowing accounted for 39.5% of total debts (32.1% at December 31, 2021).
The Group’s major borrowings continued to be in US$. Borrowings are predominantly LIBOR based.
There
is a natural hedge mechanism in place as the Group’s major revenues are in US Dollars and
currency
exposure therefore is low. Currency, interest rate exposure, and cash management functions are
all
being closely monitored and managed by the Group’s treasury team.
Amongst the bank borrowings, fixed rate debts account for 30.2% of the total bank borrowings,
the
balance being floating rate debts.
Total inventory was at US$5,232 million as compared to US$4,471 million as at June 30, 2021.
Days
inventory increased by 2 days from 136 days to 138 days The increase was due to the strategic
decision to increase safety level of raw materials to protect against shortages and provide
maximum
production flexibility and maintain high service levels. Raw material inventory increased by
6 days to 20 days with Finished Goods inventory reduced by 3 days when compared to same period
last
year.
Trade receivables turnover days were at 54 days as compared to 56 days as at June 30, 2021.
Excluding the gross up of the receivables factored which is without recourse in nature,
receivables
turnover days was at 52 days as compared to 54 days as at June 30, 2021. The Group is
comfortable
with the quality of the receivables and
will continue to exercise due care in managing credit exposure.
Trade payables days were 107 days as compared to 125 days as at June 30, 2021. The reduction in
days
mainly due to our prudent procurement strategy in second quarter 2022 as we pushed to reduce
inventory and be ready for the challenging demand environment in the second half of the year.
Working capital as a percentage of sales was at 23.3% as compared to 18.3% for the same period
last
year.
Total capital expenditures for the period amounted to US$229 million (2021: US$245 million).
As at June 30, 2022, total capital commitments for the acquisition of property, plant and equipment and equity interests in subsidiaries contracted for but not provided amounted to US$373 million (2021: US$267 million), and there were no material guarantees or off balance sheet obligations.
None of the Group’s assets are charged or subject to encumbrance.
The Group employed a total of 47,568 employees (49,934 employees as at June 30, 2021) globally. Total staff
cost
for the period under review amounted to US$1,260 million as compared to US$1,074 million in the same period
last
year.
The Group regards human capital as vital for the Group’s continuous growth and profitability and remains
committed to improve the quality, competence and skills of all employees. It provides job related training
and
leadership development programs throughout the organization. The Group continues to offer competitive
remuneration packages, discretionary share options, share awards and bonuses
to eligible staff, based on the performance of the Group and the individual employee.
The Directors have resolved to declare an interim dividend of HK95.00 cents (approximately US12.23 cents) (2021: HK85.00 cents (approximately US10.94 cents)) per share for the six-month period ended June 30, 2022. The interim dividend will be paid to shareholders listed on the register of members of the Company on September 2, 2022. It is expected that the interim dividend will be paid on or about September 16, 2022.
The register of members of the Company will be closed from September 1, 2022 to September 2, 2022, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the interim dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company’s share registrars, Tricor Secretaries Limited, whose office is presently situated at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong (to be relocated to 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong on August 15, 2022) for registration not later than 4:00 p.m. on August 31, 2022.
