Alicorp Saa · BVL:ALICORC1
Alicorp Saa — Alicorp — Q2 2020 Earnings Presentation
51 slides from Alicorp Saa's earnings presentation, Aug 13, 2020
Slide 1: Earnings Call Second Quarter 2020
Earnings Call Second Quarter 2020 A u g u s t 1 3 th, 2 0 2 0 1
Slide 2: estimates and do not constitute any declaration of historical facts. Words such as “anticipates”,
This presentation may contain financial or business projections regarding recent acquisitions, their financial or business impact, management expectations and objectives regarding such acquisitions and current management expectations on the operating and financial performance of The Company, based o
Slide 3: Topics
Topics Update on the COVID-19 crisis [4] Q2 ‘20 Consolidated Operating Results [8] Q2 ‘20 Operating Results by business [ 13 ] Liquidity and Strong Balance Sheet [ 25 ] What we expect for the rest of 2020 [ 27 ] Q&A [ 29 ] Appendix [ 31 ] 3
Slide 4: Economic outlook and Government measures due to COVID-19
Economic outlook and Government measures due to 1 COVID-19 COVID-19 is having negative impacts across Latin American countries. For 2021 GDP growth forecasts are positive and show partial recovery. Even though contagion rates remain high, odds of finding a vaccine have increased and Governments cont
Slide 5: Update on Alicorp's agile response to the COVID-19 crisis
1 Update on Alicorp’s agile response to the COVID-19 crisis Our People & Community Liquidity and Strong Balance Sheet • Our first priority: the well-being of our people • We continue with strict safety protocols for our plant • Continue to have ample levels of liquidity with workers and sales force
Slide 6: Update on Alicorp's agile response to the COVID-19 crisis: Supply & Logistics
Update on Alicorp’s agile response to the COVID-19 crisis: 1 Supply & Logistics Ensuring the supply of Food, Home and Personal Care products for our communities remains a top priority. During the second quarter we experienced disruptions in production capacity in our plants in Peru but are now back
Slide 7: Topics
Topics Update on the COVID-19 crisis [4] Q2 ‘20 Consolidated Operating Results [8] Q2 ‘20 Operating Results by business [ 13 ] Liquidity and Strong Balance Sheet [ 25 ] What we expect for the rest of 2020 [ 27 ] Q&A [ 29 ] Appendix [ 31 ] 7
Slide 8: Stable YTD revenue despite COVID-19 impacts in the second quarter
Stable YTD revenue despite COVID-19 impacts in the second quarter, affecting 2 our production capacity in Peru and our B2B and Aquafeed businesses Q2 PERFORMANCE SUMMARY – REVENUE GROWTH (YoY %) MONTHLY REVENUE AND VOLUME GROWTH • Consolidated Revenue decreased 7.6% YoY in Q2 2020, as a result of (Y
Slide 9: EBITDA showed strong recovery in June
EBITDA showed strong recovery in June, after production disruptions 2 impacted our results in April and May Q2 PERFORMANCE SUMMARY – EBITDA GROWTH (YoY %) MONTHLY EBITDA GROWTH • Consolidated EBITDA decreased 5.3%, mainly due to the impacts of COVID-19 on sales, as (YoY % growth) well as in COGS and
Slide 10: Impacts on operating income and FX headwinds affected net income
2 Impacts on operating income and FX headwinds affected net income Q2 PERFORMANCE SUMMARY – NET INCOME GROWTH (YoY %) • Net income reached S/ 84 million, a 20.3% YoY decrease, mainly impacted by i) a lower consolidated operating profit and ii) a foreign exchange loss. • Although net financial expens
Slide 11: The COVID-19 crisis has had several impacts on our business
The COVID-19 crisis has had several impacts on our business, including 1 impacts on sales as well as on COGS and SG&A Impacts of COVID-19 on our results Impacts on Revenue Quantifiable impacts on COGS and SG&A B2B • Material reduction of demand due to the closure of the Food Service industry, which
Slide 12: Topics
Topics Update on the COVID-19 crisis [4] Q2 ‘20 Consolidated Operating Results [8] Q2 ‘20 Operating Results by business [ 13 ] Liquidity and Strong Balance Sheet [ 25 ] What we expect for the rest of 2020 [ 27 ] Q&A [ 29 ] Appendix [ 31 ] 12
Slide 13: Consumer Goods Peru: Update on Market Dynamics
3 Consumer Goods Peru: Update on Market Dynamics COVID-19 had various impacts on markets, such as a higher preference for direct-to-consumer channels, an increase in at-home consumption and demand for cleaning and hygiene products, and a tiering-down effect due to an increase in unemployment and low
Slide 14: Consumer Goods Peru: Q2 Performance
3 Consumer Goods Peru: Q2 Performance HIGHLIGHTS Q2 2020 INSIGHTS MONTHLY REVENUE GROWTH • Revenue decreased 8.7% YoY mainly explained by a 12.4% reduction in volume, due to i) (YoY % growth) restricted production capacity in our plants as previously mentioned, ii) higher sales through the modern ch
Slide 15: Consumer Goods going forward
3 Consumer Goods going forward Trends • Alicorp’s mix between the traditional and modern channel will recover and reach 2019 levels in the next quarters, after production improvements in key categories (pasta, edible oils, detergents, sauces and cookies & crackers). • E-commerce will grow enormously
Slide 16: Consumer Goods International: Q2 Performance
3 Consumer Goods International: Q2 Performance HIGHLIGHTS Q2 2020 INSIGHTS COVID-19 IMPACTS • Revenue increased 8.6% YoY, despite FX headwinds, mainly due to a 12.3% YoY growth in Volume, behind our growth-focused Andean operations with Bolivia up 20% and Ecuador up 16% • No major production disrupt
Slide 17: B2B: Update on Market Dynamics
3 B2B: Update on Market Dynamics A Macro Environment & Sector Dynamics • Since the beginning of the State of Emergency in mid-March, the restaurant industry has been Restaurants dynamics in terms of growth strongly affected, with Peru’s Restaurant GDP decreasing 44.5% YTD as of May. • Due to a total
Slide 18: B2B: Q2 Performance
3 B2B: Q2 Performance HIGHLIGHTS Q2 2020 INSIGHTS RECOVERY PLAN • Revenue decreased 22.9% YoY, even though restaurants were completely closed ▪ Credit Lines during half of the quarter and started slowly resuming operations from mid-May onwards. ▪ Recovery seed contribution: Business Our Food Service
Slide 19: B2B going forward
3 B2B going forward Trends • The recovery path has started: the Food Service industry should recover continuously in the coming quarters. • E-commerce is already growing faster and will continue to do so in 2020, although the share in total revenues is expected to remain low. • Delivery and take out
Slide 20: Aquafeed: Update on Market Dynamics
3 Aquafeed: Update on Market Dynamics The Aquafeed industry has been seriously affected by the slowdown caused by the COVID-19 pandemic and specific import restrictions by China. However, the industry is expected to recover in 2021. SHRIMP SALMON Shrimp Exports Evolution in Ecuador (MT K) Salmon Har
Slide 21: Aquafeed: Q2 Performance
3 Aquafeed: Q2 Performance HIGHLIGHTS Q2 2020 INSIGHTS • Revenue decreased 15.5% YoY, mainly explained by a reduction in volume in the Shrimp Feed unit and an aggressive competitive environment with lower shrimp prices, in addition to price reductions in the Fish Feed unit due to lower commodity pri
Slide 22: Aquafeed going forward
3 Aquafeed going forward Trends Ecuador competitive • A recovery of the Ecuadorian Shrimp market is expected in 2021, since growth advantages fundamentals and competitive advantages over other producing countries remain strong. High-quality whole shrimp Shrimp • Probable consolidation of the market
Slide 23: Crushing: Q2 Performance
3 Crushing: Q2 Performance HIGHLIGHTS Q2 2020 INSIGHTS OUR AGRO SOLUTIONS INITIATIVE Innovation • Revenue remained relatively stable YoY, while Volume For farmers (market & agricultural Specialized Specialized Agro Innovation and and technical Productivity contests and virtual management) and Traini
Slide 24: Topics
Topics Update on the COVID-19 crisis [4] Q2 ‘20 Consolidated Operating Results [8] Q2 ‘20 Operating Results by business [ 13 ] Liquidity and Strong Balance Sheet [ 25 ] What we expect for the rest of 2020 [ 27 ] Q&A [ 29 ] Appendix [ 31 ] 24
Slide 25: Adequate leverage and solid liquidity levels as of Q2 2020
As of the second quarter of 2020, we maintained adequate leverage and 4 solid liquidity levels. Our CCC continued to decrease to 23 days, despite a difficult context due to COVID-19 Indebtedness Evolution1,2 Liquidity • As of June 2020 we drew US$ 230 million of short-term Strong solvency levels des
Slide 26: Topics
Topics Update on the COVID-19 crisis [4] Q2 ‘20 Consolidated Operating Results [8] Q2 ‘20 Operating Results by business [ 13 ] Liquidity and Strong Balance Sheet [ 25 ] What we expect for the rest of 2020 [ 27 ] Q&A [ 29 ] Appendix [ 31 ] 26
Slide 27: Why we are confident about the future
5 Why we are confident about the future We are prepared to overcome what comes ahead and quickly adapt to a new reality • Unique business model • Leading brand portfolio in the region, with strong product diversification • Extensive multi-channel distribution network and expanded production capacity
Slide 28: What we expect for the rest of 2020
5 What we expect for the rest of 2020 • Flat to low single digit growth for our consolidated results 2020 • Mid to high single digit growth for our Consumer Goods Peru business. • A portion of SG&A expenses related to COVID-19 could continue for the rest of the year, but in smaller proportion, espec
Slide 29: Topics
Topics Update on the COVID-19 crisis [4] Q2 ‘20 Consolidated Operating Results [8] Q2 ‘20 Operating Results by business [ 13 ] Liquidity and Strong Balance Sheet [ 25 ] What we expect for the rest of 2020 [ 27 ] Q&A [ 29 ] Appendix [ 31 ] 29
Slide 30: Topics
Topics Update on the COVID-19 crisis [4] Q2 ‘20 Consolidated Operating Results [8] Q2 ‘20 Operating Results by business [ 13 ] Liquidity and Strong Balance Sheet [ 25 ] What we expect for the rest of 2020 [ 27 ] Q&A [ 29 ] Appendix [ 31 ] 30
Slide 31: Consumer Goods International: Q2 2020 Performance by Geography
Consumer Goods International: Q2 2020 Performance by Geography
Slide 32: Consumer Goods International - Bolivia: Q2 Performance
6 Consumer Goods International - Bolivia: Q2 Performance HIGHLIGHTS Q2 2020 INSIGHTS • Revenue increased 25.6% YoY, while Volume grew 20.1% YoY, mainly due to solid growth in both the Food and the Home Care platforms behind successful innovation, market share growth and lower competition entering fr
Slide 33: Consumer Goods International - Ecuador: Q2 Performance
6 Consumer Goods International - Ecuador: Q2 Performance HIGHLIGHTS Q2 2020 INSIGHTS • Revenue increased 14.1% YoY, while Volume increased 16.2% YoY, mainly explained by volume growth in pasta, which continued to gain market share, as well as detergents and sauces. • Gross Margin increased slightly
Slide 34: Consumer Goods International - Argentina: Q2 Performance
6 Consumer Goods International - Argentina: Q2 Performance HIGHLIGHTS Q2 2020 INSIGHTS • Revenue increased 5.2% YoY, as a result of innovation in our hair care, bar soaps and laundry detergents categories. • Gross Margin increased 8.7 p.p. YoY to 30.1%, mainly due to a higher average price due to pr
Slide 35: Consumer Goods International - Brazil: Q2 Performance
6 Consumer Goods International - Brazil: Q2 Performance HIGHLIGHTS Q2 2020 INSIGHTS EBITDA MARGIN EVOLUTION • Revenue decreased 15.0% YoY in PEN, despite a 11.2% YoY increase in Volume, EBITDA Margin excl. explained by FX headwinds. Revenue in BRL increased 13.0% YoY, on the back of non-recurring ex
Slide 36: Debt & Cash Management
Debt & Cash Management alicorp
Slide 37: 1H20 Financial Highlights
6 1H20 Financial Highlights I • As of June 2020, Net Debt-to-EBITDA ratio (Excluding Crushing Business Raw Material Inventory)1,2 decreased to 2.21x3, from 2.41x4 as of December 2019. • Over the same period, Net Debt5 decreased to S/ 3,190 million, from S/ 3,351 million (a S/ 161 million FINANCIAL d
Slide 38: Q2 2020 Debt Management
6 Q2 2020 Debt Management • Net Debt-to-EBITDA ratio decreased to 2.21x as of Q2 ‘20 from 2.41x as of Q4 ‘19, mainly due to higher Cash and Cash Equivalents as a result of greater collections from sales and working capital efficiencies. • As of June 2020, 6.5% of our total financial debt had FX expo
Slide 39: Cash Flow Build Up as of Q2 2020
5 Cash Flow Build Up as of Q2 2020 HIGHLIGHTS ▪ Cash Flow from Operations was S/ 567 million, S/229 million higher than Q2 19’ mainly explained by higher collections from sales for S/ 538 million. This effect was partially offset by higher payments to suppliers, taxes and employees. ▪ Cash Flow used
Slide 40: Q2 2020 Debt maturity profile
6 Q2 2020 Debt maturity profile A As of December 2019, our total debt was PEN 4,191MM while our cash and cash equivalents cover our current financial liabilities at 1.09x. B As of June 2020, we drew USD 230MM of current debt in order to secure liquidity for our operations. Our cash and cash equivale
Slide 41: Working Capital and CAPEX Management for Q2 2020
6 Working Capital and CAPEX Management for Q2 2020 KEY MILESTONES •A Alicorp, decreased its Cash Conversion Cycle (CCC) from 38.2 days as of Q2 19’ to 23.0 days as of Q2 20’, mainly explained by an increase in the payment cycle as a result of pre-export contracts in our crushing business. • In Q2 20
Slide 42: OCF & FCF Evolution
6 OCF & FCF Evolution OPERATING & FREE CASH FLOW1 (PEN Million) 3 FY 2018 FY 2019 Q2 20' ▪ LTM Free Cash Flow as of Q2 20’ was 2 1,316 1,432 2 higher than FY 2019 1,087 1,212 921 mainly due to: 701 -177 2 i) higher collections 2 from sales and ii) the -460 -369 absence of - 1772 acquisitions 4 Opera
Slide 43: Q2 2020 Milestones
Q2 2020 Milestones
Slide 44: Q2 2020 Milestones
6 Q2 2020 Milestones RESEARCH & DEVELOPMENT 27 products were launched as part of our innovation strategy, being the most remarkable: Premixes under the brand Varieties of Pasta under the Shampoo and Conditioner A new alcohol gel alcohol “Santa Amalia” new brand “Nutregal” under the brand under the b
Slide 45: Performance by Business Unit & Regions
Performance by Business Unit & Regions
Slide 46: Performance by Business Unit & Regions (1)
5 Performance by Business Unit & Regions (1) Under IFRS 16 Under IFRS 16 Under IFRS 16 Variation Consolidated 2018 2019 2020 Q2 20 CONSOLIDATED PEN MM Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 YoY Revenues 1,711 2,123 2,208 2,247 8,289 2,226 2,461 2,593 2,592 9,872 2,448 2,274 -7.6% Gross Profit 471 518 5
Slide 47: Performance by Business Unit & Regions (2)
5 Performance by Business Unit & Regions (2) Under IFRS 16 Under IFRS 16 Under IFRS 16 Variation Food Service 2018 2019 2020 Q2 20 PEN MM Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 YoY Revenues 136 138 148 153 574 141 142 151 156 589 141 70 -50.3% Gross Profit 34 35 37 40 146 38 40 44 43 166 34 12 -70.6% S
Slide 48: Performance by Business Unit & Regions (3)
5 Performance by Business Unit & Regions (3) Under IFRS 16 Under IFRS 16 Under IFRS 16 Variation CGI 2018 2019 2020 Q2 20 PEN MM Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 YoY Revenues 250 313 366 360 1,289 394 439 406 467 1,706 424 477 8.6% Gross Profit 75 90 103 51 320 109 119 113 118 459 120 140 17.8% S
Slide 49: Performance by Business Unit & Regions (4)
5 Performance by Business Unit & Regions (4) Under IFRS 16 Under IFRS 16 Under IFRS 16 Variation CGI Brazil 2018 2019 2020 Q2 20 PEN MM Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 YoY Revenues 103 100 99 103 405 90 98 95 97 379 82 83 -15.0% Gross Profit 34 32 33 32 131 27 30 27 28 111 25 25 -15.5% SG&A1 39
Slide 50: Performance by Business Unit & Regions (5)
5 Performance by Business Unit & Regions (5) Under IFRS 16 Under IFRS 16 Under IFRS 16 Variation Aquafeed 2018 2019 2020 Q2 20 PEN MM Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 YoY AQUAFEED Revenues 485 576 516 510 2,088 490 548 541 590 2,169 530 478 -12.8% Gross Profit 102 107 95 115 419 102 116 111 131 4
Slide 51: Performance by Business Unit & Regions (6)
5 Performance by Business Unit & Regions (6) FX RATES1 Year 2018 2019 2020 Quarter Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 USD/PEN 3.24 3.26 3.29 3.36 3.29 3.32 3.32 3.34 3.36 3.34 3.41 3.43 USD/ARS 19.7 23.53 32.09 37.11 28.11 39.1 43.96 50.54 59.38 48.25 61.48 67.67 USD/BRL 3.24 3.61 3.96 3.81 3.65 3.