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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
• 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
About Brammer
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
Fluid Power 10.0 bn T&GM+PPE
25.0 bn
> €40 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%
Poland - - - -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%
Our performance - 8 Year History
£m 2004 2005 2006 2007 2008 2009 2010 2011 Total
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 31.8 156.7
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 28.9 181.9
Net Debt (€ equiv) 80.7 73.7 80.4 80.9 86.8 44.9 42.8 42.1
Total Customer
Signed off Cost
Savings
0.4 2.6 8.8 15.1 15.0 25.8 30.0 34.9
Distributor Supplier Landscape
North America Power Transmission/Fluid Power
• Motion $4.0 bn
• AIT $2.3 bn
• Kaman $1.0 bn
• BDI $0.6 bn
Industrial Products • Grainger $8 bn
• Fastenal $3 bn
• MSC $2 bn
• Airgas $4.5 bn
Distributor Supplier Landscape
North America Power Transmission/Fluid Power
• Motion $4 bn
• AIT $2.3 bn
• Kaman $1.0 bn
• BDI $0.6 bn
Industrial Products • Grainger $8 bn
• Fastenal $3 bn
• MSC $2 bn
• Airgas $4.5 bn
Europe Power Transmission/Fluid Power
• Brammer $1.1 bn
• Eriks $0.9 bn
• Others < $0.5 bn
Industrial Products • Dexis $0.5 bn (?)
• Orexad $1.0 bn (?)
• Fabory $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
Total AT BE CZ FR DE HU IT NL PL ES UK
Product availability, delivery & security of supply
28.3 31.8 26.2 23.2 29.1 29.9 19.4 29.9 23.6 27.4 28 28.9
Product quality and well known brands
23.3 20.8 17.6 22 24.8 22.3 20.2 26.2 16.1 28.5 26.1 21.3
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 9 12.7 10.7 13.8 9.2
Product range 8.5 6.1 8.3 9.8 7.1 9.2 9.7 5.7 11.6 4.8 8.6 10
Purchasing and sales support/advice
6.1 5.1 9 6.4 6 4.6 5.3 5.4 9.8 4.8 5.5 6.8
Ease of doing business on a daily basis (inc. online
transactions) 5.3 4.1 5.8 4.6 4.2 6.5 14.3 4.7 7.9 4.3 3.5 8
Understanding and acting on your future business needs
3.8 3.7 4 2.6 3.4 3.4 7.6 3 4.9 4.2 3.9 4.4
Base: 1381
Q18. Please allocate 100 points across the following factors to indicate their
importance when choosing a supplier of industrial engineering products?
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
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%
Q17. For which parts/products is a highly recognised brand more important to you?
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?
15%
32%
24%
11%
14%
8%
58%
38%
57%
56%
63%
59%
26%
31%
19%
33%
23%
34%
0% 20% 40% 60% 80% 100%
France
Germany
Italy
Netherlands
Spain
UK
It is important It would be nice to have No desire
The industry is
consolidating…………………
and consolidation favours the
market leader…………………
…...…..but only if you have
the right strategy!!
• 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
Strategies in Fragmented
Industries – Michael Porter
