Savola Group · TADAWUL:2050
Savola — Investor Presentation (July 2012)
45 slides from Savola's investor presentation, July 2012
Slide 1: Investors Presentation July 2012
Investors Presentation July 2012
Slide 2: Contents
Contents 1. Overview 2. Strategy and Growth 3. Financial Highlights and Projections 4. Our Intellectual Assets Appendix – Quarterly Results 2
Slide 3: Overview
Where we are now, and how we got here OVERVIEW 3
Slide 4: Group snapshot
Group snapshot Savola today • Listed on the Saudi stock exchange • Sales of SAR 25 billion in 2011 and SAR 21 billion in 2010 • One of the largest players in a fast growing region • Net Profit of SAR 1,202 million in 2011 and • Leading brands SAR 887 million in 2010 • Modern state of technology and
Slide 5: History – Key stages of development
History – Key stages of development One of the top food, retail and plastics packaging Today Companies in the region 2011 Acquired Pasta business in Egypt Acquisition of Giant and Géant by Panda 2008 - 09 Acquisition of Yudum in Turkey Formed Kinan in 2005 and disposed 70% stake in 2006 2004 - 07 Ac
Slide 6: 2011 Key achievements
2011 Key achievements The Group achieved record SR 1 billion net income from operations, despite: – Increase in commodity prices, raw material supply issues – Arab Spring Started implementing holding company structure (Project Focus) Savola ranked No. 1 in KSA and No. 2 in the Arab World in co
Slide 7: 2011 Key achievements
2011 Key achievements Foods • SFC net income more than doubled to SAR 490 • International start-up operations including million in 2011 despite Arab spring, Iran Sudan and Algeria delivered excellent profits sanctions and FX devaluation • Acquired Pasta company in Egypt • Although, volume growth was
Slide 8: Group structure
Group structure Savola Group Plastics Foods Retail Investments Packaging Total Revenue SAR 15.2 billion SAR 9.2 billion SAR 1.0 billion SAR 25.2 billion Super and Oils Percentage of Revenue Hyper 2010 2011 Sugar Retail Retail Pasta 38.9% 36.4% Foods Foods 57.2% 60.4% Plastics Plastics 4.2% 4.0% 8
Slide 9: Foods - Oil
Foods - Oil Overview Current markets • Established in 1979 • Manufacturing facilities in 8 countries Kazakhstan • Exports to 30 countries with strong marketing and Turkey distribution capabilities primarily in the GCC, CIS Morocco Iran Algeria Egypt Saudi and African regions Arabia • Top brands such
Slide 10: Foods – Sugar
Foods – Sugar Overview Current markets • Established in 1997 • Strategic partnership with Tate and Lyle, England • Raw Cane Refineries in Saudi and Egypt Egypt Saudi Arabia • Exports to Sudan, East Africa, Levant, GCC, Sudan and Yemen • Top brands such as Al Osra, Ziadah, Safa Key markets Capacity •
Slide 11: Foods – Pasta
Foods – Pasta Overview Current markets • Established in 1995 and was 100% acquired by Savola with a transaction value of around SAR 448 million (EGP 715 million) • Owns 2 factories with total capacity of around Egypt 124,000 MT pa • The company is the largest pasta manufacturer in Egypt with 30% mar
Slide 12: Retail
Retail Overview Current markets • Operates in two formats • Supermarkets [1,800m2 ~2,500m2] • Hypermarkets [7,000m2 ~12,000m2] Lebanon Distribution Center • Established in 1998; acquired by Savola in 1998, to represent the retail arm of the Group • Widespread branch network of 90 supermarkets and 41
Slide 13: Plastics Packaging
Plastics Packaging Overview Current markets • Established in 1980 • 4 manufacturing facilities in Saudi Arabia and 2 in Egypt Egypt Saudi Arabia • Exports to 15 countries worldwide • Product range comprises of film, packaging materials, bottles, closures, pre-forms, industrial containers and crates
Slide 14: Strategy and Growth
Where we want to go, and how we will get there STRATEGY AND GROWTH 14
Slide 15: Holding structure
Holding structure Focused Growth Autonomy and Accountability Entering new businesses OpCos to be managed independently Moving away from non-core investments Governance system Profitability enhancement and cost rationalization + Management structures Mergers & Acquisitions Organic expansion Human res
Slide 16: OpCo Autonomy
Corporate structure evolution The Savola Group Corporate Structure Evolution Independent operating companies, with Financial Holding High holding company focused on performance of Company the portfolio OpCo Autonomy Medium Strategic Management Holding company providing strategic guidance Company wit
Slide 17: New operating model
New operating model The Savola Group Board of Directors Group Level Audit Committee Investment Committee Risk Committee CSR Committee CNCG Committee Holding No reporting lines between Level portfolio businesses and Group The Savola Group CEO holding Board of OpCo’s (7 members) to be formed as follow
Slide 18: Savola Foods – a regional leader
Savola Foods – a regional leader SF History and Sales Evolution (SAR) • Large player 15.2 Bn 12.0 Bn • Business expertise – B2B, B2C, Exports, 10.2 Bn Value addition Pasta acquisition 7.6 Bn in Egypt • Distribution network 5.9 Bn • Repeatable success formula 4.4 Bn Yudum acquisition • Branding power
Slide 19: Savola Foods - Strategic direction
Savola Foods - Strategic direction Strategic Direction Description Rationale Achieve business sustainability Focus on markets that contribute the most to Savola’s profits through portfolio diversification De-prioritize markets where Savola has formidable challenges instead of upstream integrat
Slide 20: Savola Foods - Future roadmap
Savola Foods - Future roadmap Strategic Guidelines Oil Arabia Ensure dominance and sustain stable long-term growth Established Egypt Launch value added B2B and B2C oil products Markets Iran Continue to focus on growth Algeria Manage with the core markets as the business requires Oil
Slide 21: Savola Foods - Future roadmap
Savola Foods - Future roadmap Category Prioritization 2015 Profit Pool 2015 Profit Pool vs. Coherence with Savola (SR Mn) 4,500 Prime Opportunities De-prioritized categories Flour Rice 2,000 Rice Pasta 1,500 1,000 Coffee Rice Canned beans Tea Pasta 500 Tea Tea Herbs & spices Flour Pulses Pulses Cann
Slide 22: Panda – a regional giant
Panda – a regional giant • Largest and fastest growing Strong growth in sales retailer in the country (SAR millions) • Well established brand name with Acquisition of Giant Acquisition of Géant equity in produce, trust and value stores 9,182 for money 8,183 • Indigenous brand, sensitive to 27% CAGR
Slide 23: Under penetrated grocery retail market
Under penetrated grocery retail market Growing Grocery retail market in Saudi Super/Hypermarkets gaining market share [SR b] • The Saudi grocery market 123 25% 25% 25% is witnessing strong 19% growth which is 79 88 15% 72 expected to continue 12% • Within the grocery market, super and hypermarkets a
Slide 24: Regional retail opportunities
Regional retail opportunities Market size and penetration Significant potential in the MENA markets 319 58% 36% 33% 30% 24% 17% 13% 14% 8% 7% 5% 0% 2% 2% 0% 0% 2% 118 111 94 72 45 36 23 21 20 19 15 11 9 8 8 4 Grocery retail sales [2008] in SR b Modern grocery sales penetration Many of the regional m
Slide 25: Savola Plastics, a regional leader
Savola Plastics, a regional leader • SPC is focused on building a well- Strong growth in sales (SAR millions) positioned rigid plastic packaging business and a high-volume 17% CAGR 100 91 export-driven flexible plastics 87 packaging business 57 • SPC operates in Saudi Arabia and 40 36 Egypt and have
Slide 26: Savola Plastics market dynamics
Savola Plastics, a regional leader • Surplus PE and PET capacity in MEAF will give SPC an opportunity to develop stronger bargaining power Low Resin Cost Market Dynamics • Highly fragmented Low Delivered • China is 5-7% more than market with significant Strong Value KSA & Egypt in terms of Cost grow
Slide 27: Investment portfolio
Investment portfolio Strategy definition and execution Investment Executed strategy Asfan - In-kind contribution to Masharef project Yasmine Riyadh - Sold to Kinan with realized capital gain of SAR 76 million and SAR 77 million Land & Hanaki Jeddah in 2011 - Agreement signed to sell to KEC with expe
Slide 28: Other investments
Other investments All numbers are in SAR millions Book Value 25 2,761 116 209 374 Listed 259 Land entities 508 Financial 184 24 Other Services and 421 Funds Kinan or 241 managed 401 by Kinan Ownership % 80% 49% 11.4% 2.4% 5% 30% 30% 50% 14% 15% 4.67% • Total investment portfolio reduced from SAR 4,2
Slide 29: Financial Highlights and Projections
What we got, and what we plan to get FINANCIAL HIGHLIGHTS AND PROJECTIONS 29
Slide 30: Financial results - Snapshot
Financial results - Snapshot All numbers are in SAR millions Share price Revenue 25,196 1,002 21,029 884 17,917 9,182 751 13,821 8,183 10,410 772 7,359 558 5,611 3,815 15,224 12,027 9,351 5,766 7,027 2007 2008 2009 2010 2011 Tadawul All Share Index Herfy Almarai Savola Foods Retail Plastics EBIT Inc
Slide 31: Financial results - Revenue
Financial results - Revenue All numbers are in SAR millions Revenue - 2011 9,182 1,002 25,196 (211) 37% 23% 0% 100% 51 4% (1)% 36% 5,861 Others includes HQ costs and eliminations Revenue 9,312 growth of Oil Sugar Pasta Retail Packaging Others Total around 20% contributed Revenue - 2010 8,183 884 21,
Slide 32: Financial results - Profitability
Financial results - Profitability All numbers are in SAR millions Net Profits - 2011 100% 26% 14% 1% 17% 8% 2% 28% 6% 3% 1,202 33 340 1,082 72 30 91 19 (153) 200 170 7 313 Adjusted profit Net Profits - 2010 growth of 100% 43% around 17% 12% 15% 0% 7% 11% 1% 7% 4% 241 933 36 887 Impairment of 61 382
Slide 33: Income statement by segments
Income statement by segments Full year (all figures are in SAR millions) Segment Wise Financials December 2011 December 2010 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 7,958 1,081 591 234 680 6,014 1,033 628 147 705 Oil-Start-up Ma
Slide 34: Less reliance on non-managed businesses
Less reliance on non-managed businesses All numbers are in SAR millions 58% 42% 2011 702 500 41% 59% 2010 367 520 52% 48% Managed 2009 494 458 Non Managed 50% 50% 2008 102 100 8% 92% 2007 99 1,131 Non Managed business include share of profits from Al Marai, Herfy, Kinan, capital gains, impairments a
Slide 35: Diminished reliance on capital gains
Diminished reliance on capital gains SAR millions Projected net profit excluding capital gains 120 97 660 753 1,212 1,082 855 933 488 477 496 -294 -46 2006 2007 2008 2009 2010 2011 2012P Income from Core operations Capital gains - net 35
Slide 36: Our Intellectual Assets
Its all about people, people, people OUR INTELLECTUAL ASSETS 36
Slide 37: Our ethics principles
Our ethics principles • Amanah: Particular obligation to be truthful with the people who have entrusted us with their investments i.e. our shareholders. مجاهدة أمانة Mujahadah Amanah • Taqwa: Act with integrity in our relationships with external parties e.g., our customers. • Birr: To have genui
Slide 38: Our values framework
Our values framework • Tawado: Viewing achievements without arrogance. • Iq’tida: Accepting that we are continually Tawado learning. 1 • Azm: Being persistent, even in the face of Ihsan Al-Dhan adversity. Mu’azarah Iq’tida It’qan Qabool • It’qan: Maintaining high standards and 2 4 striving for conti
Slide 39: Savola's balanced way
Savola’s balanced way • We will continue to adhere to our ethics and values framework Amanah • We will ensure that we build a live, (Honesty) inspiring model of our ethics and values Shareholder for the future generations of Savola Taqwa Birr (Empathy) (Fairness) • We will continue to maintain good
Slide 40: Recognition for the Groups intangible assets
Recognition for the Groups intangible assets • Savola Group has been ranked No. 2 among Arab World public listed companies in Corporate Governance and Transparency based on the new index launched by Standard & Poor’s and Hawkamah Institute and funded by IFC. The ranking is based on Environmental, so
Slide 41: We are a responsible corporate citizen
We are a responsible corporate citizen 41 41
Slide 42: Appendix – Quarterly Results
Appendix QUARTERLY RESULTS 42
Slide 43: Segment Wise Financials Q1 2012 and Q2 2012
(all figures are in SAR millions) Segment Wise Financials Q1 2012 Q2 2012 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 2,147 285 175 63 198 2,242 367 218 78 235 Oil-Start-up Markets* 415 71 39 26 44 453 70 37 17 42 Total Oil 2,562 35
Slide 44: Thank you
THANK YOU 44
Slide 45: Disclaimer
Disclaimer This Presentation (“Presentation”), dated July 2012, has been prepared by Savola Group (“Savola’’), and is based on the business plan and related information of Savola Group (“Savola” or the “Company”). The Presentation does not constitute or form part of and should not be construed as, a