Remy Cointreau Sa · EURONEXT:RCO
Remy Cointreau Sa — FY2013/14 Earnings Presentation
40 slides from Remy Cointreau Sa's earnings presentation, Jun 5, 2014
Slide 1: Annual Results
We seek nothing but Perfection Annual Results Year ended 31 March 2014 5 June 2014
Slide 2: François Hériard Dubreuil
François Hériard Dubreuil Chairman and Chief Executive Officer
Slide 3: Decline in Sales following 4 Years of Growth
Decline in Sales following 4 Years of Growth (in published terms) We seek nothing but Perfection (€m) 1 400 CAGR 2008/13 +14% CAGR 2008/14 1 200 +8% 1 000 800 600 400 200 0 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 Annual Results for the year ended 31 March 2014 3
Slide 4: 2013/14 Key Figures
2013/14 Key Figures We seek nothing but Perfection Change Published Organic €1,031.6 ■ Sales (13.5%) (10.7%) m of which own brands €788.6m (17.6%) (14.8%) ■ Current operating profit €150.2m (38.8%) (40.8%) ■ Current operating margin 14.6% - ■ Net profit (excluding non-recurring items) €80.2m (46.9%)
Slide 5: Change in net debt over 10 years
Change in net debt over 10 years We seek nothing but Perfection (M€) 839.7 771.5 562.1 531.9 501.4 10-year average : 484 M€ 440.9 413.5 328.9 265.5 188.6 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Annual Results for the year ended 31 March 2014 5
Slide 6: Unchanged Strategy
Unchanged Strategy We seek nothing but Perfection ■ Maintaining our high-end strategy and brands’ image ■ Significant and targeted investment ■ Geographical balance ■ Strict cost control Confidence in the medium to long-term Annual Results for the year ended 31 March 2014 6
Slide 7: Review of Activities
Review of Activities François Hériard Dubreuil Chairman and Chief Executive Officer Luca Marotta Chief Financial Officer
Slide 8: A Year of Transition
A Year of Transition We seek nothing but Perfection ■ Double-digit decline in sales: decision to reduce inventory levels in China against a backdrop of weaker consumption ■ Solid growth in the US ■ Growth in Europe, the Middle East and Africa ■ Negative currency impact on sales but positive on gross
Slide 9: A Year of Transition: Brands
A Year of Transition We seek nothing but Perfection Brands ■ Rémy Martin: organic sales decline of 20.8% ■ Will to reduce inventories in China (amplified in the second half) ■ Healthy growth in the US, Russia and Japan ■ Liqueurs & Spirits: slight growth (up 3.3% in organic terms) ■ Cointreau - Soli
Slide 10: A Year of Transition: Markets
A Year of Transition We seek nothing but Perfection Markets ■ Slowdown in Asia-Pacific ■ Decline in China but continued momentum in Japan ■ Solid performance in the Americas region ■ Healthy price-mix effect in the US ■ Robust growth in Central and Latin America markets ■ Growth in the Europe, Middl
Slide 11: Group Sales
Group Sales We seek nothing but Perfection €m Currency Organic impact (127.8) (33.9) €(161.7)m 1,193.3 1,031.6 Organic (10.7%) Published (13.5%) March 13 March 14 Annual Results for the year ended 31 March 2014 11
Slide 12: Quarterly Change in Sales
Quarterly Change in Sales (in organic terms) We seek nothing but Perfection Q1 Q2 Q3 Q4 H1 H2 2013-14 -2.3% -3.6% -5.3% -10.7% -16.1% -18.9% -17.8% Annual Results for the year ended 31 March 2014 12
Slide 13: Divisional Change in Sales
Divisional Change in Sales We seek nothing but Perfection Rémy Martin Liqueurs & Spirits Partner Brands Group Organic (20.8%) +3.3% +6.1% (10.7%) Published (23.4%) +0.2% +2.7% (13.5%) Annual Results for the year ended 31 March 2014 13
Slide 14: Breakdown of Sales
Breakdown of Sales We seek nothing but Perfection By division By region Sales: €1,031.6m Americas Liqueurs & Partner Spirits Brands 40% (+7pps) 23% (+3pps) 24% (+4pps) Europe/ Asia- M. East/ Pacific Africa 29% (-11pps) 31% (+4pps) Rémy Martin 53% (-7pps) Annual Results for the year ended 31 March 20
Slide 15: Breakdown of Sales by Geographic Region
Breakdown of Sales by Geographic Region We seek nothing but Perfection Rémy Martin Liqueurs & Spirits €551.2m €237.3m Americas 36% (+9pps) Americas Asia- 32% (-1pp) Europe/ Pacific M. East/ 10% (+0pp) Africa 17% (+4pps) Asia-Pacific Europe/M. East/ Africa 47% (-13pps) 58% (+1pp) Annual Results for t
Slide 16: Current Operating Profit
Current Operating Profit We seek nothing but Perfection Currency Volume Price/ A&P Other €m impact Mix +5.0 +24.7 +20.3 (19.2) 245.4 (126.0) Organic (40.8%) Published (38.8%) 150.2 €(95.2)m March 13 March 14 COP/Sales: 20.6% 14.6% (org: 13.6%) Annual Results for the year ended 31 March 2014 16
Slide 17: Net Profit
Net Profit We seek nothing but Perfection €m Net profit excluding non-recurring items Net profit Group share Published (46.9%) Published (52.2%) 151.5 130.4 80.2 62.4 March 13 March 14 March 13 March 14 Annual Results for the year ended 31 March 2014 17
Slide 18: Rémy Martin
Rémy Martin We seek nothing but Perfection Sales decline (20.8%) organic in volume (10.7%) Targeted innovation €m VSOP Jolin Tsai +12.1%* +25.1%* +12.7%* (20.8%)* Limited Edition (China) 800 719.8 592.5 600 551.2 486.0 1738 (US) 400 200 0 Centaure (China) March March March March 2011 2012 2013 2014
Slide 19: Rémy Martin
Rémy Martin We seek nothing but Perfection Current Operating Profit Currency Volume Price/ A&P Other €m impact Mix +3.9 + 33.2 + 15.8 (10.9) 216.6 (133.2) Organic (43.9%) 125.4 Published (42.1%) €(91.2)m March 13 March 14 COP/Sales: 30.1% 22.8% (org: 21.3%) Annual Results for the year ended 31 March
Slide 20: Liqueurs & Spirits
Liqueurs & Spirits We seek nothing but Perfection Sales growth of 3.3% organic in volume (0.6%) A premium and diversified portfolio Breakdown of sales €m Liqueur (3.7%)* +5.1%* +3.8%* +3.3%* Cointreau Fizz 300 237.0 237.3 250 205.8 213.5 200 Rum 150 Mount Gay Black Barrel 100 50 0 Metaxa 12* March M
Slide 21: Liqueurs & Spirits
Liqueurs & Spirits We seek nothing but Perfection Current Operating Profit Currency Volume Price/ A&P Other €m impact mix +4.5 +1.8 +0.3 (8.5) (5.8) organic (21.2%) 44.8 published (17.1%) 37.1 €(7.7)m March 13 March 14 COP/Sales: 18.9% 15.6% (org. 14.4%) Annual Results for the year ended 31 March 20
Slide 22: Partner Brands
Partner Brands We seek nothing but Perfection Sales: +6.1% organic Current operating profit +2.1% in volume €m €m 243.1 (*) 8.7 (*) 236.6 9,0 250 220.1 216.1 8,0 200 7,0 6,0 150 4.5 5,0 4.2 4,0 100 2.6 3,0 2,0 50 1,0 0 0,0 March March March March March March March March 2011 2012 2013 2014 2011 2012
Slide 23: Current Operating Profit
Current Operating Profit We seek nothing but Perfection % Change €m 2013 2014 Published Sales 1,193.3 1,031.6 (13.5%) Gross profit 736.9 618.2 (16.1%) % of sales 61.8% 59.9% Sales and marketing expenses (403.3) (379.8) Administrative expenses (89.8) (89.6) Other income & expenses 1.6 1.4 Current ope
Slide 24: Current Operating Margin
Current Operating Margin We seek nothing but Perfection (600 bps) 20.6% (320 bps)(1) +100 bps 14.6% + (40 bps) +130 bps (340 bps) FX = (190 bps) published 2012/2013 Gross A&P Distribution/ Currency 2013/2014 COP/Sales profit Other impact(2) COP/Sales (1) exc. transactional currency impact; (2) Trans
Slide 25: Underlying decline in Current Operating profit limited to 7%
Underlying decline in Current Operating We seek nothing but Perfection profit limited to 7% 300 250 Published COP: €245.4m Overstocking Underlying decline in estimated at €40 m 2013/14 COP: (7.4%) 200 €(15.2)m Adjusted COP: €190.2m Readjustment of stocks (€40 m) 150 Adjusted COP: Published COP: 100
Slide 26: Change in Operating Margin over 6 Years
Change in Operating Margin over 6 Years We seek nothing but Perfection €m CAGR 61.0%(1) 61.1%(1) +12.4% 696.9(1) 61.4% 668.2(1) 630.0 57.1% 518.3 55.2% 445.9 52.5% 373.2 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 (1) Restated for stock adjustments; Published data was €736.9m (61.8%) for 2012/13
Slide 27: Change in Current Operating Margin over 6 Years
Change in Current Operating Margin over 6 Years We seek nothing but Perfection €m CAGR 20.2% 18.0% (1) +8.9% 207.7 205.4(1) 17.4% (1) 190.2(1) 18.4% 167.0 17.6% 142.0 17.4% 124.0 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 (1) Restated for stock adjustments; Published data was €245.4m (20.6%) fo
Slide 28: Net profit
Net profit We seek nothing but Perfection €m 2013 2014 Current operating profit 245.4 150.2 Other operating income/(expenses) (7.5) (4.9) Operating profit 237.9 145.3 Financial charges (20.0) (26.2) Profit before tax 217.9 119.1 Taxation (72.0) (45.8) Tax rate 33.1% 38.5% Share in profit of associat
Slide 29: Net Debt/Cash Flow
Net Debt/Cash Flow We seek nothing but Perfection €m 2013 2014 Change Net financial debt at 1 April (188.6) (265.5) (76.9) Gross operating profit (EBITDA) 268.1 171.5 (96.6) Change in inventories and WCR related to eaux-de-vie (38.1) (80.8) (42.7) Other WCR items (8.1) 19.1 27.2 Capital expenditure
Slide 30: Breakdown of Financial Charges
Breakdown of Financial Charges We seek nothing but Perfection €m 2013 2014 Cost of gross financial debt (23.9) (26.4) Investment income 3.0 3.7 Sub-total (20.9) (22.7) Impact of the portfolio of interest rate hedging instruments (1.2) (0.1) Net foreign exchange gain 4.7 - Other financial charges (ne
Slide 31: Foreign Exchange Hedging Impact
Foreign Exchange Hedging Impact We seek nothing but Perfection 1.39 Hedged rate 1.37 1.35 1.34 1.34 Average €/$ US rate 1.32 1.31 1.29 2010/2011 2011/2012 2012/2013 2013/2014 March March March March Annual Results for the year ended 31 March 2014 31
Slide 32: Balance Sheet at 31 March 2014
Balance Sheet at 31 March 2014 We seek nothing but Perfection Assets Liabilities €m 2013 in % 2014 in % 2013 in % 2014 in % Non-current Shareholders’ 843 37% 835 37% 1,095 48% 1,012 45% assets equity Current 1,237 55% 1,257 55% Current and assets non-current 720 32% 666 29% liabilities of which 946
Slide 33: ROCE
ROCE We seek nothing but Perfection 46.1% 36.8% 34.2% 30.3% 25.3% 21.6% 17.4% 17.1% 15.4% 5.2% Rémy Martin Liqueurs & Partner Group Group Spirits Brands (restated for stock adjustments) 2013 2014 Annual Results for the year ended 31 March 2014 33
Slide 34: Change in Capital Employed
Change in Capital Employed We seek nothing but Perfection €m Rémy Martin Liqueurs & Spirits Partner Brands +€88.6m +€3.6m €(23.7)m (+14.0%) (+3.7%) (-29.6%) 15.1 3.1 4.2 8.4 88.2 (7.9) 879.1 (18.9) (22.1) (1.6) 810.6 +€68.5m +8.5% March RM RM RM net RM L&S L&S L&S Partner Partner March 2013 EDV fini
Slide 35: Highlights of 2013/14
Highlights of 2013/14 We seek nothing but Perfection ■ 30 August 2013 Disposal of Larsen to the Finnish group Altia ■ 25 March 2014 Reduction in Rémy Cointreau’s share capital following the cancellation of treasury shares purchased during the share buyback programme ■ 31 March 2014 Dynasty Fin
Slide 36: Financial Events
Financial Events We seek nothing but Perfection ■ 22 July 2013 Fitch assigned an “Investment grade” rating to Rémy Cointreau (BBB-, stable outlook/negative since 27 January 2014) ■ 13 August 2013 €65m bond issue with a 10-year maturity and a fixed coupon of 4% ■ 10 October 2013 Standard & Poor
Slide 37: Post-Balance Sheet Events
Post-Balance Sheet Events We seek nothing but Perfection ■ 11 April 2014 Rémy Cointreau signed an amendment and an extension to its €255 million revolving credit facility at a lower cost and with a maturity extended to April 2019 ■ 30 May 2014 Acquisition of a distillery in Barbados. This US$9.5
Slide 38: 2014/15 Outlook
2014/15 Outlook We seek nothing but Perfection ■ The environment remains uncertain: transforming Chinese spirits market and weak macro-economy in Western Europe ■ Yet the Group is entering the 2014/15 financial year with confidence and anticipates organic growth(1) in both: ■ Sales, and ■ Current op
Slide 39: Medium-Term Outlook
Medium-Term Outlook We seek nothing but Perfection Confidence in medium/long-term growth drivers and in the relevance of the strategic positioning of the brands: ■ Quality of our upmarket brands ■ Resolutely pursuing innovation ■ Increased prioritisation of marketing investment ■ Network strengthene
Slide 40: We seek nothing but Perfection
We seek nothing but Perfection