Britvic — Investor Presentation (February 2018)
48 slides from Britvic's investor presentation, February 2018
Slide 1: Britvic plc Investor presentation
Britvic plc Investor presentation
Slide 2: Britvic investment case – a track record of creating shareholder value
BRITVIC INVESTMENT CASE – A TRACK RECORD OF CREATING SHAREHOLDER VALUE Portfolio of Market Leading Brands Strong Channel Positions Healthier / “Better For You” Focus Growing International Presence Resilient and Expandable category Cash Generative - Disciplined Capital Allocation Policy Britvic plc I
Slide 3: Strategy
STRATEGY
Slide 4: A new strategy for growth was launched in 2013
A NEW STRATEGY FOR GROWTH WAS LAUNCHED IN 2013 Generate profitable growth International Step change our Build trust and respect in our core markets expansion business capability in our communities » Innovation » M&A in new » Best in class supply » A great company to do geographies chain infrastructu
Slide 5: Significant progress made since strategy was launched
SIGNIFICANT PROGRESS MADE SINCE STRATEGY WAS LAUNCHED Generate profitable growth International Step change our Build trust and respect in our core markets expansion business capability in our communities » Tripled % of revenue » 2 acquisitions in Brazil » £240m capital » 20 billion calories from inn
Slide 6: The strategy has consistently delivered profitable growth
THE STRATEGY HAS CONSISTENTLY DELIVERED PROFITABLE GROWTH REVENUE CAGR +3.9% ADJUSTED EBITA CAGR +9.1% REVENUE OUTSIDE GB 41% +700bps ADJUSTED EBITA MARGIN 12.7% +230bps ADJUSTED EARNINGS PER SHARE CAGR +10.7% DIVIDEND PER SHARE CAGR +9.5% All figures since 2013 Britvic plc Investor Presentation 201
Slide 7: Accelerated margin growth since 2013 – confident of future expansion
ACCELERATED MARGIN GROWTH SINCE 2013 – CONFIDENT PRODUCT BUSINESS OF FUTURE EXPANSION INNOVATION CAPABILITY PROGRAMME 12.7% SG&A REVENUE EFFICIENCY MANAGEMENT 10.9% 10.4% 9.2% BRAND AND INTERNATIONAL CHANNEL MIX PROFITABILITY 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 New Management Team
Slide 8: A long-term track record of earnings growth
A LONG-TERM TRACK RECORD OF EARNINGS GROWTH 52.9 49.3 46.3 41.8 36.5 35.2 33.7 33.7 27.2 26.5 24.8 24.5 23.0 20.4 20.9 18.4 17.7 17.7 18.4 16.7 15.0 12.6 11.0 10.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 EPS DPS Britvic plc Investor Presentation 2018 8
Slide 9: A clear capital allocation policy to deliver superior shareholder returns
A CLEAR CAPITAL ALLOCATION POLICY TO DELIVER SUPERIOR SHAREHOLDER RETURNS PROFITABLE GROWTH STRONG UNDERLYING FCF CONVERSION Maintain long-term A progressive Invest in business Selective M&A in core debt leverage within dividend policy capability categories 1.5x to 2.5x range DELIVERING SUPERIOR SHA
Slide 10: Overview
OVERVIEW
Slide 11: History
HISTORY Mid 19th C 1955 1995 2005 2010 2017 A chemist starts Company sold to a group Robinsons IPO Acquisition of Acquisition creating homemade of wine traders, acquired Britvic France of Bela Ischia tonics for the local establishing its routes Chelmsford community with the pub trade 1938 1987 2000
Slide 12: Experienced board and executive team
EXPERIENCED BOARD AND EXECUTIVE TEAM BOARD Simon Mat John Sue Euan Suniti Ian William Litherland Dunn Daly Clark Sutherland Chauhan McHoul Eccleshare CEO CFO Chairman Remco NED NED Audit Chair NED Chair EXECUTIVE Paul Olivier Kevin Hessel Joao Matt Clive Doug Clare Graham Mercier Donnelly De Jong Ca
Slide 13: Overview
OVERVIEW IN-MARKET PRODUCTION IN GREAT BRITAIN, FRANCE, IRELAND AND BRAZIL RANGE OF CATEGORY LEADING OWNED-BRANDS IN ALL MARKETS BOTTLER FOR PEPSICO IN GREAT BRITAIN AND IRELAND COMMERCIAL OPERATIONS IN BENELUX , ASIA AND UNITED STATES NEARLY 4,700 EMPLOYEES Britvic plc Investor Presentation 2018 13
Slide 14: Great Britain overview
GREAT BRITAIN OVERVIEW #2 SOFT DRINKS SUPPLIER. PORTFOLIO OF CARBONATED AND STILL BRANDS AVAILABLE IN ALL RETAIL CHANNELS 11.6% VALUE SHARE OF TAKE-HOME CHANNEL 3 FACTORIES AND GROUP HEAD OFFICE 59% OF GROUP REVENUE Source: Nielsen to 30.09.17 Britvic plc Investor Presentation 2018 14
Slide 15: France overview
FRANCE OVERVIEW ACQUIRED 2010 RANGE OF SYRUPS AND JUICE-BASED BRANDS MAINLY AVAILABLE IN GROCERY CHANNEL 8.7% VALUE SHARE OF TAKE-HOME CHANNEL 4 FACTORIES 18% OF GROUP REVENUE Source: Nielsen to 08.10.17 Britvic plc Investor Presentation 2018 15
Slide 16: Ireland overview
IRELAND OVERVIEW ACQUIRED 2007 #2 SOFT DRINKS SUPPLIER PORTFOLIO OF CARBONATED AND STILL BRANDS AVAILABLE IN ALL RETAIL CHANNELS 24.0% VALUE SHARE OF TAKE-HOME CHANNEL 2 FACTORIES 11% OF GROUP REVENUE Source: IRI to 17.09.17 Britvic plc Investor Presentation 2018 16
Slide 17: Brazil overview
BRAZIL OVERVIEW ACQUIRED 2015 & 2017 RANGE OF CONCENTRATES AND JUICE-BASED BRANDS MAINLY AVAILABLE IN MODERN GROCERY CHANNEL 8.9% VALUE SHARE OF TAKE-HOME CHANNEL 4 FACTORIES 9% OF GROUP REVENUE Source: Nielsen to 27.09.17 Britvic plc Investor Presentation 2018 17
Slide 18: Other international overview
OTHER INTERNATIONAL OVERVIEW RANGE OF OWNED-BRANDS AVAILABLE COMMERCIAL OPERATIONS IN BENELUX AND UNITED STATES EXPORT SALES TO 50+ COUNTRIES TRAVEL BUSINESS SUPPLYING AIRLINES, CRUISE SHIPS ETC 0 FACTORIES, SUPPLIED FROM OTHER MARKETS 4% OF GROUP REVENUE Britvic plc Investor Presentation 2018 18
Slide 19: Step-changing our business capability by investing in our supply chain infrastructure
STEP-CHANGING OUR BUSINESS CAPABILITY BY INVESTING IN OUR SUPPLY CHAIN INFRASTRUCTURE STEP-CHANGE OUR BUSINESS CAPABILITY A THREE YEAR £240M CAPITAL INVESTMENT PROGRAMME MINIMUM 15% EBITDA RETURN - £36M EBITDA & £21M EBITA FROM 2020 ADDITIONAL REVENUE AND WORKING CAPITAL BENEFITS ANTICIPATED CONSOLI
Slide 20: On completion the supply chain investment will step-change our capability
ON COMPLETION THE SUPPLY CHAIN INVESTMENT WILL STEP-CHANGE OUR CAPABILITY STEP-CHANGE OUR BUSINESS CAPABILITY CAPACITY FLEXIBILITY EFFICIENCY ENVIRONMENTAL COST Medium term can & pet Broader range of Faster lines Fewer road miles Lower production & capacity pack sizes distribution cost Produce close
Slide 21: A solid financial platform underpinning the strategy
A SOLID FINANCIAL PLATFORM UNDERPINNING THE STRATEGY Additional £175m private placement funding issued in H1 Maturing 2025 to 2032, Fixed and floating rate Replacing £120m notes maturing early 2017 Average coupon c.2.5% £400m revolving credit facility extended to November 2021 Circa £958m total debt
Slide 22: Progress in 2017 and outlook for 2018
PROGRESS IN 2017 AND OUTLOOK FOR 2018
Slide 23: 2017 – another year of strong progress
2017 – ANOTHER YEAR OF STRONG PROGRESS STRONG REVENUE AND PROFIT GROWTH TWO ACQUISITIONS COMPLETED AND INTEGRATED INCREASING CONTRIBUTION FROM IN-YEAR BENEFITS OF BUSINESS INNOVATION CAPABILITY PROGRAMME AHEAD OF GUIDANCE CONTINUED ORGANIC MARGIN GROWTH 41% OF REVENUE GENERATED OUTSIDE THROUGH REVEN
Slide 24: Category remained resilient in 2017
CATEGORY REMAINED RESILIENT IN 2017 Market Volume +0.8% +4.2% (1.3)% (11.9)% FY Market Value +2.0% +5.5% +0.1% (5.7)% GB take-home market data is supplied by Nielsen and runs to 30 September 2017. ROI take-home market data is supplied by Nielsen and runs to 8 October 2017. French market data is supp
Slide 25: Investment in innovation is delivering revenue growth
INVESTMENT IN INNOVATION IS DELIVERING REVENUE GROWTH GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS Invested in our innovation capability to generate % OF TOTAL REVENUE FROM category & channel growth opportunities through: OWNED-BRAND INNOVATION 6.0 5.4 • Making our portfolio more premium and more
Slide 26: Growing revenue across our core markets
GROWING REVENUE ACROSS OUR CORE MARKETS GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS • Successful revenue management to mitigate cost inflation • Pepsi MAX continued to gain share in a competitive category • Launch of R Whites premium range generating strong growth • Stills volume growth, adverse
Slide 27: Innovation delivering growth across kids, family & adult categories
INNOVATION DELIVERING GROWTH ACROSS KIDS, FAMILY & ADULT CATEGORIES GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS REVENUE REVENUE REVENUE £4M RETAIL SALES REVENUE REVENUE +17% +40% +32% VALUE SINCE LAUNCH +13% +29% REVENUE IS BRITVIC CONSTANT CURRENCY. RETAIL SALES IS SOURCED FROM NIELSEN / IRI Bri
Slide 28: Pepsi continued to outperform the category and gain share
PEPSI CONTINUED TO OUTPERFORM THE CATEGORY AND GAIN SHARE GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS RETAIL SALES VALUE % YOY – TAKE HOME The Pepsi MAX success story 14.0 Continued to gained significant share, benefiting from 12.5 long-term consumer move towards low/no sugar 12.0 #1 “black cola”
Slide 29: 2018 will continue the Pepsi MAX success story
2018 WILL CONTINUE THE PEPSI MAX SUCCESS STORY GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS 1993 2013 2017 2018 In 2017 Total Pepsi Max Cherry is the #1 no sugar Ginger has generated Major football and taste of RSV reached £280m, flavoured cola variant £6m RSV since launch in summer marketing +12.
Slide 30: Improving performance for GB stills
IMPROVING PERFORMANCE FOR GB STILLS GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS ROBINSONS J20 FRUIT SHOOT Marginal decline in core New promotional price Fruit Shoot in volume range volume framework implemented growth Deflationary environment Volume declined with Hydro variant up strongly reductio
Slide 31: Continuing the reinvigoration of the Robinsons brand
CONTINUING THE REINVIGORATION OF THE ROBINSONS BRAND GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS 2015 2017 2018 2018 Everyday range Refresh’d launched as a More premium range Premium range targeting reformulated in 2015 ready to drink offer targeting older families adults Added sugar variant Diff
Slide 32: Fruit Shoot evolving to target wider range of occasions
FRUIT SHOOT EVOLVING TO TARGET WIDER RANGE OF OCCASIONS GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS 2017 2018 Relaunched Hydro Core variant reformulated to New schools compliant Juiced Flavoured water variant reduce sweetness and add variant Intended for older children vitamins All natural formul
Slide 33: Brazil – successfully navigating current challenging conditions
BRAZIL – SUCCESSFULLY NAVIGATING CURRENT CHALLENGING CONDITIONS INTERNATIONAL EXPANSION Gained volume and value share in tough market conditions Successfully grown margin through revenue and cost management Invested in long-term growth drivers • Brands - marketing & insight capability • Reach - comm
Slide 34: Steady progress for Fruit Shoot in the USA
STEADY PROGRESS FOR FRUIT SHOOT IN THE USA INTERNATIONAL EXPANSION Grown revenue and improved profitability Increased market value share for singles in Convenience & Gas • #2 brand overall, achieving #1 in more states Dollar General chiller listing from Q1 2018, 2 variants in >8,000 outlets Multi-pa
Slide 35: Investing to grow our international footprint
INVESTING TO GROW OUR INTERNATIONAL FOOTPRINT INTERNATIONAL EXPANSION BRAZIL Major innovation programme to grow category and expand portfolio Realising group procurement opportunities Using Bela Ischia integration to extend regional and route to market footprint USA Working with Pepsi to grow single
Slide 36: Well placed to navigate soft drinks industry levies in the UK and Ireland
WELL PLACED TO NAVIGATE SOFT DRINKS INDUSTRY LEVIES IN THE UK AND IRELAND BUILD TRUST AND RESPECT IN OUR COMMUNITIES PROACTIVE, INDUSTRY BROAD PORTFOLIO OFFERING CLEAR COMMERCIAL PLAN LEADING HEALTH POSITION CHOICE, WEIGHTED TO LOW FOR 2018 SINCE 2013 SUGAR 72% OF GB AND 69% OF IRELAND PORTFOLIO EXE
Slide 37: BCP on-track to deliver sustainable long-term benefits
BCP ON-TRACK TO DELIVER SUSTAINABLE LONG-TERM BENEFITS STEP-CHANGE OUR BUSINESS CAPABILITY 2016 to 2017 2018 2019 Group Flattened management structure Ireland Outsourced distribution warehousing London New large PET line & warehousing New small PET line & Leeds New large PET line warehouse automatio
Slide 38: 2017 summary
2017 SUMMARY ANOTHER STRONG PERFORMANCE IN 2017 WELL POSITIONED TO NAVIGATE HEADWINDS INVESTING IN INNOVATION AND INTERNATIONALISATION BCP WILL DELIVER SIGNIFICANT BENEFITS CONFIDENT OF LONG TERM MARGIN GROWTH EXPECTING CONTINUED PROGRESS IN 2018 Britvic plc Investor Presentation 2018 38
Slide 39: 2018 guidance – confident of further progress
2018 GUIDANCE – CONFIDENT OF FURTHER PROGRESS ANTICIPATE LOW SINGLE DIGIT INPUT INFLATION FY18 PROPOSED CAPEX £140M TO £150M YEAR-END DEBT LEVERAGE 2.1X TO 2.3X EFFECTIVE TAX RATE 22.5% TO 23.5% INTEREST CHARGE MARGINALLY HIGHER THAN F17 Britvic plc Investor Presentation 2018 39
Slide 40: Appendix
APPENDIX
Slide 41: 2017 - A strong financial performance
2017 - A STRONG FINANCIAL PERFORMANCE Metric Reported % Organic* % Revenue £1,540.8m +7.7% +2.5% Adjusted EBITA £195.5m +5.1% +5.6% Adjusted EBITA Margin 12.7% (30)bps 30bps Adjusted EPS 52.9p +7.3% DPS 26.5p +8.2% Adjusted Net Debt/EBITDA 2.0x (0.2)x Numbers are at actual exchange rate. Adjusted EB
Slide 42: 2017 - Business unit performance (GB)
2017 - BUSINESS UNIT PERFORMANCE GB Carbs GB Stills Total GB CARBS Volume +1.4% +0.5% +1.2% Growth led by Pepsi MAX and R Whites ARP per litre +2.3% (5.3)% (0.4)% Price realisation from new promotional price points Revenue +3.7% (4.7)% +0.9% Brand contribution +0.8% (5.6)% (1.5)% Margins impacted by
Slide 43: 2017 - Business unit performance (France, Ireland)
2017 - BUSINESS UNIT PERFORMANCE France Ireland FRANCE Volume 0.4% 3.3% Brands growing ahead of private label ARP per litre 2.7% 0.2% Strong growth for Pressade and Fruit Shoot Revenue 3.0% 14.1% Margin impacted by brand mix and limited price realisation Brand contribution (0.6)% 8.4% Brand margin %
Slide 44: 2017 - Business unit performance (Brazil, International)
2017 - BUSINESS UNIT PERFORMANCE Brazil International BRAZIL Volume (14.2)% (1.0%) Volumes impacted by prevailing macro-economic environment ARP per litre 14.1% 6.1% Revenue (2.2)% 5.1% Margin growth reflecting revenue and cost management Brand contribution 7.5% 81.6% Brand margin % 190bps 1,310bps
Slide 45: 2017 - Unrelenting focus on cost efficiency
2017 - UNRELENTING FOCUS ON COST EFFICIENCY % Organic Constant FY17 Exchange Rate Further A&P investment in H2 as planned Total A&P spend 67.8 5.0 Reduction in non-working A&P % revenue 4.5% (30)bps marketing spend delivered benefits Non-brand A&P 10.1 17.2 Fixed Supply Chain 105.1 (3.0) Supply chai
Slide 46: 2017 - Cash flow
2017 - CASH FLOW 2017 £m 2016 £m Adjusted EBITA 195.5 186.1 Depreciation 40.3 33.2 Amortisation (non-acq related) 8.3 8.9 Adjusted loss on disposal of PPE 2.0 1.9 Adjusted EBITDA 246.1 230.1 Adjusted working capital 26.0 (25.8) Capital spend (146.7) (121.9) Pension contributions (22.1) (25.9) Intere
Slide 47: ADR programme
ADR PROGRAMME • ADRs give access to cross-border market liquidity • Cost effective and convenient to own • Quoted in U$D • Dividends paid in U$D • Symbol - BTVCY • CUSIP - 111190104 • Ratio - 1ADR = 2 ORD • Underlying SEDOL : BON8QD5 • Underlying ISIN : GB00B0N8QD54 • Depositary : BNY MELLON Britvic
Slide 48: Accounting for soft drinks levies and IFRS15
ACCOUNTING FOR SOFT DRINKS LEVIES AND IFRS15 THE LEVY IFRS 15 Levy will apply from April 2018 in GB & Ireland IFRS15 – revenue from contracts with customers is being adopted Paid to HMRC quarterly in arrears in the UK The primary impact for Britvic on implementing IFRS15 will Net revenue will increa