Pidilite Industries Limited · NSE:PIDILITIND
Pidilite Industries — Q2 FY2009-10 Earnings Presentation
51 slides from Pidilite Industries's earnings presentation, 2009
Slide 1: Investor Presentation Q2 & H1 – FY09-10
------------------------------------------------------------------------------------------ Investor Presentation Q2 & H1 – FY09-10 1
Slide 2: Presentation Structure
Presentation Structure ------------------------------------------------------------------------------------------ • Overview of Company • Performance: Q2 & H1 – FY09-10 • Review of Business Units • Consolidated results • Key Trends: H2 FY09-10 2
Slide 3: Company Overview
Company Overview ------------------------------------------------------------------------------------------ • Established in 1959 • Pioneer in the consumer and industrial specialty chemicals business in India • 2/3rd sale comes from products and segments pioneered in India • High market share and st
Slide 4: Company Overview
Company Overview ------------------------------------------------------------------------------------------ • Brand "Fevicol" ranked as # 1 Household care brand by Brand Equity in 2007-08 • Pidilite ranked as # 1 company in chemical segment by Business Today (2009) • Consistent growth in sales, prof
Slide 5: Track record of consistent growth
Track record of consistent growth ------------------------------------------------------------------------------------------ 3,000 20,000 5 year CAGR 18,000 2,500 Net Sales : 21.0% 16,000 EBITDA : 15.8% 14,000 EBITDA & PAT (Rs. Millions) 2,000 PAT : 19.0% Net Sales (Rs. Millions) 12,000 1,500 10,000
Slide 6: Attractive Return on Capital Employed
Attractive Return on Capital Employed ------------------------------------------------------------------------------------------ 40.0% 32.4% 30.0% 29.3% 30.0% 27.6% 27.2% 20.0% 16.0% 10.0% 0.0% 2004-05 2005-06 2006-07 2007-08 2008-09 H1 09-10 ROCE (%) ROCE = PBIT / Avg. Capital Employed 6
Slide 7: Consistent Dividend Payout
Consistent Dividend Payout ------------------------------------------------------------------------------------------ 50.0% 39.7% 40.0% 37.6% 36.9% 35.4% 30.0% 27.5% 20.0% 10.0% 0.0% 2004-05 2005-06 2006-07 2007-08 2008-09 Dividend Payout Ratio Dividend Payout = Dividend / PAT 7
Slide 8: Peer company comparison
Peer company comparison ------------------------------------------------------------------------------------------ 40.0% 36.2% 31.7 31.1 28.8% 30.0% 24.1% 24.2% 24.3% 24.0 23.5% 21.0% 21.6% 20.1% 18.9% 17.5% 17.7% 17.8 20.0% 15.8% 15.8% 16.2 13.9% 10.0% 0.0% Sales CAGR EBITDA CAGR EBITDA % PE Ratio
Slide 9: Segment overview
Segment overview ------------------------------------------------------------------------------------------ • Consumer and Bazaar products • Specialty Industrial Chemicals • Others 9
Slide 10: Consumer and Bazaar products
Consumer and Bazaar products ------------------------------------------------------------------------------------------ • Consumer and Bazaar products: 73% of Company’s sales • Consists of Adhesives & Sealants (50%), Construction & Paint Chemicals (17%) and Art Materials (6%) • Market leader in all
Slide 11: Consumer and Bazaar products
Consumer and Bazaar products ------------------------------------------------------------------------------------------ • Extensive product range, developed through strong in-house R&D • Strong brands • Extensive distribution network • Significant potential to expand consumption in most products / s
Slide 12: Specialty Industrial Chemicals
Specialty Industrial Chemicals ------------------------------------------------------------------------------------------ • Industrial Specialty products: 21% of company’s sales • Consists of Industrial Adhesives (7%), Industrial Resins (8%), Organic pigments and preparations (6%) • Extensive range
Slide 13: Specialty Industrial Chemicals
Specialty Industrial Chemicals ------------------------------------------------------------------------------------------ • Pioneer in manufacturing Pigment Violet 23 in India • Specialty polymers and co-polymers for various industries like paints, non-woven and flocked fabrics, construction chemica
Slide 14: Overseas operations
Overseas operations ------------------------------------------------------------------------------------------ • Growing presence in adhesives & sealants segment in SAARC, ME and Africa. Strong market position achieved in SAARC and GCC • Established manufacturing facility in Bangladesh and Egypt in
Slide 15: Overseas operations
Overseas operations ------------------------------------------------------------------------------------------ • Acquired three small construction chemical companies in Singapore, Dubai and Thailand in 2005/2006 to get entry in these markets and to acquire technology with potential in India 15
Slide 16: Overseas operations
Overseas operations ------------------------------------------------------------------------------------------ • Acquired automotive chemical (for professionals and households) business in USA (2008-09 Revenues: Rs.588 mn) to enter this segment with significant synergy to Pidilite's business. 60 % s
Slide 17: Overseas operations
Overseas operations ------------------------------------------------------------------------------------------ • Acquired education art material company in USA (2008-09 Revenues: Rs.479 mn) to get entry in high potential USA market and to get access to extensive range for sale in other Pidilite terr
Slide 18: Overseas operations
Overseas operations ------------------------------------------------------------------------------------------ • Acquired adhesives & sealants company in Brazil (2008-09 Revenues: Rs.797 mn) to get entry in large and growing market with market dynamics to some extent similar to India. Business affec
Slide 19: Overseas operations
Overseas operations ------------------------------------------------------------------------------------------ • Industrial adhesives – Focus to identify competitive niche products – Established presence in GCC, UAE, SAARC & African Countries – In Footwear segment, upgrading customers with technical
Slide 20: Overseas operations
Overseas operations ------------------------------------------------------------------------------------------ • Organic Pigments and preparations – Presence with major Colourant industries in Europe and the USA; well established in Brazil, China, Japan, Australia, Kenya and Nigeria – Achieved break
Slide 21: Overseas operations
Overseas operations ------------------------------------------------------------------------------------------ • Industrial resins – Major exports to South East Asia, Europe, Latin America, SAARC, Africa and GCC – Developing specific products for water based paint industry – Focus on developing new
Slide 22: Presentation Structure
Presentation Structure ------------------------------------------------------------------------------------------ • Overview of Company • Performance: Q2 & H1 – FY09-10 • Review of Business Units • Consolidated results • Key Trends: H2 FY09-10 22
Slide 23: Environment – H1 FY09-10
Environment – H1 FY09-10 ------------------------------------------------------------------------------------------ • Retail demand good in select categories – Maintenance products, Construction Chemicals • Growth a challenge in Industrial segment • Lower material costs resulting in higher margins;
Slide 24: Standalone Sales & Profit Performance
Standalone Sales & Profit Performance ------------------------------------------------------------------------------------------ • Sales, excluding “Others”, in value terms, have grown by 10.0% in Q2 and 10.2% in H1 – Consumer & Bazaar Products business has registered a growth of 13.2% in Q2 and 12.
Slide 25: Standalone Sales & Profit Performance
Standalone Sales & Profit Performance ------------------------------------------------------------------------------------------ • Significant improvement in margins driven by; – Lower material costs – Material cost index for H1 was 95 vs. 113 last year – Planned reduction in advertising and sales p
Slide 26: Standalone Sales & Profit Performance
Standalone Sales & Profit Performance ------------------------------------------------------------------------------------------ • Control on working capital/capex, softer interest rates and FCCB buyback helps reduce interest burden • PBT before exceptional items and Foreign exchange difference grew
Slide 27: Stand Alone Sales
Stand Alone Sales ------------------------------------------------------------------------------------------ 27
Slide 28: Stand Alone PBIT
Stand Alone PBIT ------------------------------------------------------------------------------------------ 28
Slide 29: Cash Flow
Cash Flow ------------------------------------------------------------------------------------------ • Strong Cash generation due to operating performance • Sharp reduction in working capital • Capex in Q2 is Rs.128 mn – PCR project capex Rs.70 mn – Other Local Capex Rs.42 mn • Investments in Overse
Slide 30: Cash Flow
Cash Flow ------------------------------------------------------------------------------------------ • Sharp reduction in Debt in comparison to last year due to debt repayments • Net debt as on 30/09/09 is Rs.2660 mn vs. Rs.5328 mn last year; Short term surplus invested in Liquid Funds; investments
Slide 31: Standalone - Cash Flow
Standalone - Cash Flow ------------------------------------------------------------------------------------------ 31
Slide 32: Presentation Structure
Presentation Structure ------------------------------------------------------------------------------------------ • Overview of Company • Performance: Q2 & H1 – FY09-10 • Review of Business Units • Consolidated results • Key Trends: H2 FY09-10 32
Slide 33: Review of Business Units
Review of Business Units ------------------------------------------------------------------------------------------ • Consumer & Bazaar Products • Industrial Products • Elastomer Project • International Business 33
Slide 34: Consumer & Bazaar Products
Consumer & Bazaar Products ------------------------------------------------------------------------------------------ • Top Line impacted due to price reduction as lower material costs partially passed on in some products to customers in adhesives – Volume growth higher than value growth • Strong gr
Slide 35: Consumer & Bazaar Products
Consumer & Bazaar Products ------------------------------------------------------------------------------------------ • Good growth in retail segment of Construction Chemicals partially offset by lower growth in projects and infrastructure • Early signs of revival in projects and construction segmen
Slide 36: Industrial Products
Industrial Products ------------------------------------------------------------------------------------------ • Strong growth in domestic sales of Industrial adhesives due to new product introduction and new customer wins • Strong growth in domestic sales of pigments due to new customer wins • Expo
Slide 37: Elastomer Project
Elastomer Project ------------------------------------------------------------------------------------------ • All the equipment arrived at the project site at Dahej (SEZ) • Detailed engineering work and refurbishment of plant and machinery is under progress • Pilot plant being set up at site to mak
Slide 38: International Business
International Business ------------------------------------------------------------------------------------------ • Overseas subsidiaries have reduced losses mainly due to improved performance at Brazil & USA – Overall loss at EBIT level in H1 down from Rs.128 mn to Rs.35 mn • Significant actions ta
Slide 39: International Business
International Business ------------------------------------------------------------------------------------------ • Plant at Egypt commissioned in July • Trading company set up in Egypt to sell manufactured products and trade in imported products • Bangladesh plant commissioned in October • Chemson
Slide 40: Sales of International Subsidiaries
Sales of International Subsidiaries ------------------------------------------------------------------------------------------ 40
Slide 41: Region Wise Sales Breakup
Region Wise Sales Breakup ------------------------------------------------------------------------------------------ H1 2009-10 H1 2008-09 Thailand 4.6% Others Thailand Others 2.7% 5.0% 5.4% Dubai 7.9% Dubai 7.2% USA 48.7% USA 50.5% Brazil Brazil 36.0% 31.9% 41
Slide 42: EBIT of International Subsidiaries
EBIT of International Subsidiaries ------------------------------------------------------------------------------------------ Rs. Mn EBIT Q2 2009-10 Q2 2008-09 Improvement USA 3 -21 24 Brazil -5 -46 41 Dubai -21 -9 -11 Thailand -1 -6 5 Others -7 -6 0 Total -30 -88 58 Rs. Mn EBIT H1 2009-10 H1 2008-0
Slide 43: Presentation Structure
Presentation Structure ------------------------------------------------------------------------------------------ • Overview of Company • Performance: Q2 & H1 – FY09-10 • Review of Business Units • Consolidated results • Key Trends: H2 FY09-10 43
Slide 44: Consolidated Sales & Profit Performance
Consolidated Sales & Profit Performance ------------------------------------------------------------------------------------------ • Sales, excluding “Others”, in value terms have grown by 10.8% in Q2 and H1 • Margins improved in Q2 & H1 of 2009-10 as compared to Q2 & H1 of 2008-09 – PBT before exce
Slide 45: Presentation Structure
Presentation Structure ------------------------------------------------------------------------------------------ • Overview of Company • Performance: Q2 & H1 – FY09-10 • Review of Business Units • Consolidated results • Key Trends: H2 FY09-10 45
Slide 46: Key Trends: H2 FY09-10
Key Trends: H2 FY09-10 ------------------------------------------------------------------------------------------ • Improving economic sentiment • Revival in Infrastructure sector resulting in new projects • Hardening of commodity prices, Oil at 12 month high • Inflation expected to creep up • Inter
Slide 47: Key Trends: H2 FY09-10
Key Trends: H2 FY09-10 ------------------------------------------------------------------------------------------ • Sustained demand generation initiatives to stimulate demand • Introduction of new products in select categories • Import of VAM likely to remain economical vs manufacture • Margins lik
Slide 48: Key initiatives
Key initiatives ------------------------------------------------------------------------------------------ • Sales and Marketing: – Building network and product range for growth in semi urban and rural markets –economy range, small packs and new products. – Back end operations strengthened through c
Slide 49: Key initiatives
Key initiatives ------------------------------------------------------------------------------------------ • Human Resources: – Quality manpower recruited at senior levels to build long term capability – Renewed focus on Learning and Development – Non family professionals now occupying many key seni
Slide 50: Disclaimer
Disclaimer ------------------------------------------------------------------------------------------ This presentation may contain statements which reflect Management’s current views and estimates and could be construed as forward looking statements. The future involves certain risks and uncertaint
Slide 51: Thank You
------------------------------------------------------------------------------------------ Thank You
Pidilite Industries — Q2 FY2009-10 Earnings Presentation on 6ix