Britvic — FY2017 Earnings Presentation
38 slides from Britvic's earnings presentation, 2017
Slide 1: Britvic plc Preliminary Results 2017
Britvic plc Preliminary Results 2017
Slide 2: Delivering on our strategic priorities and vision
CEO – SIMON LITHERLAND DELIVERING ON OUR STRATEGIC PRIORITIES AND VISION Britvic plc Preliminary Results 2017 2
Slide 3: 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 4: 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 5: Investment in innovation is delivering growth
INVESTMENT IN INNOVATION IS DELIVERING GROWTH GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS Since 2013 we have invested in our innovation % OF TOTAL REVENUE FROM OWNED-BRAND INNOVATION capability to realise category & channel growth opportunities through: 6.0 5.4 • Making our portfolio more premium
Slide 6: 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 7: Brazil – successfully navigating current challenging conditions
BRAZIL – SUCCESSFULLY NAVIGATING CURRENT CHALLENGING CONDITIONS REALISE GLOBAL OPPORTUNITIES 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 -
Slide 8: Steady progress for Fruit Shoot in the USA
STEADY PROGRESS FOR FRUIT SHOOT IN THE USA REALISE GLOBAL OPPORTUNITIES 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 Mul
Slide 9: A strong financial performance
CFO – MAT DUNN A STRONG FINANCIAL PERFORMANCE Britvic plc Preliminary Results 2017 9
Slide 10: Category remained resilient in 2017, weather adversely impacted Q4
CATEGORY REMAINED RESILIENT IN 2017, WEATHER ADVERSELY IMPACTED Q4 Market Volume +0.8% +4.2% (1.3)% (11.9)% FY Market Value +2.0% +5.5% +0.1% (5.7)% Market Volume (5.5)% +2.6% (8.2)% (6.8)% Q4 Market Value (3.0)% +3.6% (6.5)% (3.9)% GB take-home market data is supplied by Nielsen and runs to 30 Sept
Slide 11: A strong financial performance
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 EBITA is
Slide 12: Business unit performance: GB carbs and stills
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 cost p
Slide 13: Pepsi continued to outperform the category and gain share
PEPSI CONTINUED TO OUTPERFORM THE CATEGORY AND GAIN SHARE 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” 10.0 8.0 The preferred no sugar cola in taste
Slide 14: Improving performance for GB Stills
IMPROVING PERFORMANCE FOR GB STILLS 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 reduction of in-store F&D Extended consumption Competit
Slide 15: Business unit performance: France and Ireland
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 Brand contribution (0.6)% 8.4% realisation Brand margin % (110)b
Slide 16: Business unit performance: Brazil and International
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 price realisation and cost management Brand contribution 7.5% 81.6% Brand margin % 190bps 1,310b
Slide 17: Unrelenting focus on cost efficiency
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 chain depre
Slide 18: Continued organic margin expansion
CONTINUED ORGANIC MARGIN EXPANSION 12.7% BUSINESS SG&A REVENUE CAPABILITY EFFICIENCY MANAGEMENT PROGRAMME 10.4% PRODUCT BRAND AND INTERNATIONAL INNOVATION CHANNEL MIX PROFITABILITY 2013 2014 2015 2016 2017 Britvic plc Preliminary Results 2017 18
Slide 19: Improving free cash flow underpinning balance sheet strength
IMPROVING FREE CASH FLOW UNDERPINNING BALANCE SHEET STRENGTH FCF GENERATION OF £54.5M INVESTMENT IN LONG-TERM GROWTH DRIVERS PROPERTY DISPOSALS COMPLETED NET DEBT LEVERAGE AT LOWER DELIVERING IN EXCESS OF £17M END OF GUIDANCE IMPROVING FREE CASHFLOW FROM 2019 STABLE LONG-TERM FUNDING PLATFORM Britvi
Slide 20: A solid financial platform underpinning the strategy
A SOLID FINANCIAL PLATFORM UNDERPINNING THE STRATEGY 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 SHAREHOLDER RETURNS Brit
Slide 21: 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 Net revenue will increase to
Slide 22: Technical guidance
TECHNICAL GUIDANCE 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 Preliminary Results 2017 22
Slide 23: Clear priorities for 2018
CEO - SIMON LITHERLAND CLEAR PRIORITIES FOR 2018 Britvic plc Preliminary Results 2017 23
Slide 24: Our strategy remains as appropriate today as in 2013
OUR STRATEGY REMAINS AS APPROPRIATE TODAY AS IN 2013 GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS REALISE GLOBAL OPPORTUNITIES CONTINUE TO STEP-CHANGE OUR BUSINESS CAPABILITY BUILD TRUST AND RESPECT Britvic plc Preliminary Results 2017 24
Slide 25: Our strategy has consistently delivered profitable growth
OUR 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 Preliminary Results 2017
Slide 26: 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 Cherry is the #1 no Ginger has generated Major football and Max RSV reached sugar flavoured cola £6m RSV since launch taste of summer £280m, +12.5% YoY variant in 201
Slide 27: 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 More premium range Premium range reformulated in 2015 a ready to drink offer targeting older families targeting adults Added sugar variant Diff
Slide 28: 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 New schools compliant to reduce sweetness and Juiced variant Flavoured water variant add vitamins All natural formulation with 50% Juice / 50% w
Slide 29: Investing to grow our international footprint
INVESTING TO GROW OUR INTERNATIONAL FOOTPRINT REALISE GLOBAL OPPORTUNITIES 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 s
Slide 30: 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 PROACTIVE, INDUSTRY BROAD PORTFOLIO CLEAR COMMERCIAL PLAN LEADING HEALTH POSITION OFFERING CHOICE, FOR 2018 SINCE 2013 WEIGHTED TO LOW SUGAR 72% OF GB AND 69% OF IRELAND PORTFOLIO EXEMPT/UNDER LEVIES Br
Slide 31: BCP on-track to deliver sustainable long-term benefits
BCP ON-TRACK TO DELIVER SUSTAINABLE LONG-TERM BENEFITS CONTINUE TO 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 warehou
Slide 32: GB supply chain investment will step-change our capability
ON COMPLETION THE GB SUPPLY CHAIN INVESTMENT WILL STEP-CHANGE OUR CAPABILITY CONTINUE TO 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 cos
Slide 33: Summary
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 Preliminary Results 2017 33
Slide 34: Questions
QUESTIONS Britvic plc Preliminary Results 2017 34
Slide 35: Appendix
APPENDIX Britvic plc Preliminary Results 2017 35
Slide 36: Cash flow
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) Interest and
Slide 37: 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 38: 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