East African Breweries Plc · NSEKE:EABL
East African Breweries — FY2020 Earnings Presentation
42 slides from East African Breweries's earnings presentation, 2020
Slide 1: EABL F20 Full Year Results
EABL F20 FULL YEAR RESULTS
Slide 2: Full Year Results Briefing
F20 Commercial Review FULL YEAR Andrew Cowan RESULTS F20 Financial Performance BRIEFING Risper Ohaga F21 Priorities Andrew Cowan Q&A
Slide 3: F20 Commercial Overview
F20 COMMERCIAL OVERVIEW Andrew Cowan Group Managing Director
Slide 4: Agenda
AGENDA • Business Update • F20 Financial highlights • Sustainability and responsibility
Slide 5: Business Update
BUSINESS UPDATE
Slide 6: Delivered solid NSV growth since F17
DELIVERED SOLID NSV GROWTH SINCE F17 NSV Kes’bn CAGR 100 +8.4% +12.4% +4.6% 83 80 73 10 70 6 8 12 60 11 11 40 60 53 54 20 0 F17 F18 F19 Kenya Uganda Tanzania
Slide 7: Started F20 strong – 3rd consecutive half of double digit NSV growth
STARTED F20 STRONG – 3RD CONSECUTIVE HALF OF DOUBLE DIGIT NSV GROWTH H1 H2 FY F17 -0.1% +0.1% 0% F18 +0.2% +8.9% +4.6% F19 +13.2% +11.6% +12.4% F20 +10.0%
Slide 8: C19 pandemic has led to emergence of specific economic, consumer and trade trends
C19 PANDEMIC HAS LED TO EMERGENCE OF SPECIFIC ECONOMIC, CONSUMER AND TBA TRENDS Growth in Shrinking Massive lower income Economies Job Loss groups Bulk buying Consumer Preference convenience downtrading for Spirits packs Growth of Distribution & On- off trade & Rise in illicit trade disruption e-cha
Slide 9: …and we have adapted to the new normal
…AND WE HAVE ADAPTED TO THE NEW NORMAL SAFE OPERATING ENVIRONMENT WINNING IN NEW CHANNELS BUSINESS SUSTAINABILITY • Staff provided with personal • Adapting to E-Commerce • Protecting cash and liquidity protective equipment • Employees encouraged to work • Enhancing presence in off-trade • Supporting
Slide 10: Supporting our people, partners & communities through the crisis
SUPPORTING OUR PEOPLE, PARTNERS & COMMUNITIES THROUGH THE CRISIS Hand sanitizer donations across all markets Kes 50m donation to the Kenya Covid Emergency fund Support to vulnerable communities Hygiene awareness campaign PPE
Slide 11: F20 FY Financial Highlights
F20 FY FINANCIAL HIGHLIGHTS 11
Slide 12: Strong H1 trajectory offset by COVID-19
STRONG H1 TRAJECTORY OFFSET BY COVID-19 H1 H2 FY Volume +5% -28% -11% Net sales +10% -29% -9% Gross profit +14% -41% -13% Profit after tax +9% -104% -39%
Slide 13: Robust H1 performance scaled down by mandatory outlet closure in Kenya and Uganda
ROBUST H1 PERFORMANCE SCALED DOWN BY MANDATORY OUTLET CLOSURE IN KENYA AND UGANDA Contribution to overall H1 H2 FY Key brands EABL KENYA 69% +8% -37% -14% UGANDA 16% +10% -21% -5% TANZANIA 15% +19% +10% +14% TOTAL EABL 100% +10% -29% -9%
Slide 14: Strong resilience in mainstream spirits through the crisis
STRONG RESILIENCE IN MAINSTREAM SPIRITS THROUGH THE CRISIS VIBRANT EXPLODE SHAPE NEW WIN IN PREMIUM MAINSTREAM BEER MAINSTREAM SPIRITS FRONTIERS H1 +10% +13% +9% +10% H2 -22% -17% -36% -41% FY -6% -1% -13% -16%
Slide 15: Kenya spirits more resilient during the crisis
Kenya SPIRITS MORE RESILIENT DURING THE CRISIS -14%* Bottled beer -23% Mainstream Spirits Scotch -1% +2% Senator -13% * Net sales FY growth
Slide 16: Uganda growth of premium beer and spirits cushioned impact of lockdown
Uganda GROWTH OF PREMIUM BEER AND SPIRITS -5%* CUSHIONED IMPACT OF LOCKDOWN Premium beer Premium spirits +5% +15% Black & White Innovation +37% Pilsner Mainstream spirits +24% -20% * Net sales FY growth
Slide 17: Tanzania sustained growth of Serengeti family
Tanzania SUSTAINED GROWTH OF SERENGETI +14%* FAMILY Serengeti Family +19% Pilsner +22% Guinness +34% Mainstream spirits +33% * Net sales FY growth
Slide 18: Sustainability & Responsibility
SUSTAINABILITY & RESPONSIBILITY
Slide 19: Positively impacting our communities
POSITIVELY IMPACTING OUR COMMUNITIES Responsible Drinking Initiatives Blood donation drives Over 100,000 tree seedlings planted Water projects
Slide 20: Adding value to our communities
ADDING VALUE TO OUR COMMUNITIES Project Heshima New barley variety launched Staff participation in environmental conservation Mtama ni Mali programme
Slide 21: Thank You
Thank You Please hold the questions to the end
Slide 22: F20 Financial Performance
F20 FINANCIAL PERFORMANCE Risper Ohaga Chief Financial Officer
Slide 23: Agenda
AGENDA • Financial Highlights • Topline Performance • Profitability and cost management • Cash Performance • CAPEX • Dividend
Slide 24: Financial Highlights
FINANCIAL HIGHLIGHTS H1 H2 F20 vs LY Volume +5% -28% 12.4mEUs -11% Net sales +10% -29% KES 74.9bn -9% EBIT +9% -79% KES 14.5bn -32% Profit after tax +9% -104% KES 7.0bn -39% Operating cash 102% -30% 68% -43ppt conversion
Slide 25: Strong growth trajectory in H1 offset by closure of outlets in H2
STRONG GROWTH TRAJECTORY IN H1 OFFSET BY CLOSURE OF OUTLETS IN H2 F20 H1 H2 vs LY KES bn Volume (mEU) +5% -28% 12.4 -11% Gross sales +7% -30% 133.4 -11% Excise duties -4% +31% (58.4) +13% Net sales +10% -29% 74.9 -9%
Slide 26: COVID-19 curtailed our H1 growth trajectory
COVID-19 CURTAILED OUR H1 GROWTH TRAJECTORY Movements in net sales (KES bn) 90 -9% 0.7 0.9 2.7 11.1 80 1.2 0.5 82.5 70 74.9 H1 H2 60 F19 Kenya Uganda Tanzania Kenya Uganda Tanzania F20
Slide 27: Closure of outlets in March impacted Q3 & Q4
CLOSURE OF OUTLETS IN MARCH IMPACTED Q3 & Q4 Movements in net sales (KES bn) 88 2.3 1.6 84 1.9 80 10.3 76 82.5 72 74.9 68 F19 Q1 Q2 Q3 Q4 F20
Slide 28: Prudent cost management protecting gross margin
PRUDENT COST MANAGEMENT PROTECTING GROSS MARGIN F20 H1 H2 vs LY KES bn Volume +5% -28% 12.4 -11% (mEU) Gross sales +7% -30% 133.4 -11% Excise duties -4% +31% (58.4) +13% Net sales +10% -29% 74.9 -9% Cost of sales -7% +19% (41.9) +6% Gross profit +14% -41% 33.0 -13%
Slide 29: Cost savings initiatives protecting bottom line
COST SAVINGS INITIATIVES PROTECTING BOTTOM LINE Cost of Sales Kes’bn 48 -6% 45 44.4 3.1 4.0 5.8 0.6 41.9 42 0.6 39 36 33 30 F19 Volume Mix Cost Productivity Fixed Costs F20 Initiatives initiatives
Slide 30: Focus on cost reduction
CLINICAL FOCUS ON COST REDUCTION F20 H1 H2 vs LY KES bn Gross profit +14% -41% 33.0 -13% Selling & distribution -7% +24% (6.6) +9% Administrative costs -9% +23% (8.6) +9% FX gains, net -114% -117% (0.2) -115% Other charges, net -50% -128% (3.2) -99% EBIT +9% -79% 14.5 -32%
Slide 31: Profit of KES 7bn delivered against a challenging operating environment
PROFIT OF KES 7BN DELIVERED AGAINST A CHALLENGING OPERATING ENVIRONMENT F20 F19 H1 H2 vs LY KES bn KES bn EBIT +9% -79% 14.5 21.2 -32% Finance costs, net -9% -17% (3.8) (3.4) -13% Profit before tax +9% -99% 10.7 17.8 -40% Income tax expense -9% +92% (3.6) (6.3) +42% Profit after tax +9% -104% 7.0 11
Slide 32: Increased borrowings to fund operations
INCREASED BORROWINGS TO FUND OPERATIONS F20 F19 vs LY KES bn KES bn Long term debt 36.9 31.1 +19% Short term debt 8.0 5.2 +54% Total debt 44.9 36.3 +24% Finance costs, net 3.8 3.4 +13%
Slide 33: Maintained positive operating cashflows
MAINTAINED POSITIVE OPERATING CASHFLOWS F20 F19 vs LY KES bn KES bn Profit before tax 10.7 17.8 -7.2 Depreciation and amortization 5.5 4.4 -1.1 Interest expense 3.8 3.4 -0.4 Working capital movements (6.3) 2.9 -9.2 Inventory (3.4) 0.3 -3.7 Debtors 2.6 (0.4) +3.0 Creditors (5.5) 3.0 -8.5 Cash generat
Slide 34: Investing in our future growth
INVESTING IN OUR FUTURE GROWTH Kisumu Breweries CAPEX: Total F20 FY investment of KES 8.1bn (F19 KES 11.7bn) • Capacity expansions - (Kes 2bn) • Returnables and Coolers – Kes 1.1bn • Kisumu brewery - Kes 939m DPV’s in Dar & Kampala • New modern office (leased) - Kes 558m • Brand innovation – Kes 450
Slide 35: Our long-term value creation impacted by COVID-19
OUR LONG-TERM VALUE CREATION IMPACTED BY COVID 19 Dividends KES/Share 10 8.5 8 7.5 7.5 6 6.0 5.5 5.5 4 3.0 0.0 2 3.0 2.5 2.0 2.0 0 F17 F18 F19 F20 Interim Dividends Final Dividends
Slide 36: Our financial strategy is focused on…
OUR FINANCIAL STRATEGY IS FOCUSED ON… • Rebuilding momentum in profitability • Flexible planning and forecasting • Data driven and accelerated decision-making • Contingency based resource allocation
Slide 37: Thank You
Thank You Please hold the questions to the end
Slide 38: F21 Priorities
F21 PRIORITIES
Slide 39: We are clear on our ambition
To create the best performing, most We are clear on trusted and respected consumer our ambition products company in Africa ❑ Superior consumer insight ❑ Win quality market share ❑ Win in Scotch and Johnnie Walker ❑ Win in Beer and Guinness ❑ Speed and agility ❑ Rapidly reallocate resources/invest sm
Slide 40: Emerging stronger
EMERGING STRONGER WIN QUALITY STRONG ‘LOOK MARKET SHARE + BACK’ REPUTATION
Slide 41: Q & A Session
Q & A Session
Slide 42: Cautionary statement concerning forward-looking statements
Cautionary statement concerning forward-looking statements This document contains ‘forward-looking’ statements. These statements can be identified by the fact that they do not relate only to historical or current facts. In particular, forward-looking statements include all statements that express fo
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