Britvic — H1 2017 Earnings Presentation
35 slides from Britvic's earnings presentation, May 2017
Slide 1: Interim Results Presentation
Interim Results Presentation May 2017 Making life’s everyday moments more enjoyable
Slide 2: Chairman - Gerald Corbett
Chairman - Gerald Corbett Making life’s everyday moments more enjoyable 2
Slide 3: Agenda
Agenda Simon Litherland – Chief Executive Officer ✓ Successful delivery of our strategic priorities Mathew Dunn – Chief Financial Officer ✓ Strong first half performance Simon Litherland – Chief Executive Officer ✓ Summary conclusions Making life’s everyday moments more enjoyable 3
Slide 4: Simon Litherland: Successful delivery of our strategic priorities
Simon Litherland Successful delivery of our strategic priorities Making life’s everyday moments more enjoyable 4
Slide 5: Appointment of a new Chairman
Appointment of a new Chairman Gerald Corbett steps down after 12 years as Chairman John Daly appointed Chairman ➢ Effective from September 2017 ➢ Handover period to ensure smooth succession ➢ John joined the board in January 2015 – extensive international business and management experience Other Boa
Slide 6: A strong start to the year
A strong start to the year Strong first half performance Successfully managing cost inflation Confident of meeting market expectations Maintaining focus on long-term growth drivers Making life’s everyday moments more enjoyable 6
Slide 7: Successful delivery of our strategic priorities
Successful delivery of our strategic priorities ➢ Revenue growth in all markets ➢ Improving stills performance Profitable growth ➢ Innovating into growth segments in core markets ➢ Successfully dealing with cost inflation ➢ Organic margin continuing to increase ➢ Building a platform for growth in Br
Slide 8: Improving stills performance in our core markets
PROFITABLE GROWTH IN OUR CORE MARKETS Improving stills performance in our core markets ➢ Robinsons ➢ Returned to volume growth in GB ➢ Targeting new occasions through different packs and brand extensions ➢ New packs generated 12% of H1 revenue ➢ Miwadi ➢ “ZERO” range growth of core and mini pack for
Slide 9: Exciting innovation launches meeting consumer needs
PROFITABLE GROWTH IN OUR CORE MARKETS Exciting innovation launches meeting consumer needs ➢ Purdey’s healthier ➢ All natural ready-to-drink ➢ Extending reach of energy +74% YoY 500ml PET Pressade brand ➢ Drench healthy ➢ Available in 3 flavours, ➢ Bonjour range hydration +14% YoY no artificials, low
Slide 10: Excellent GB carbonates performance led by Pepsi Max
PROFITABLE GROWTH IN OUR CORE MARKETS Excellent GB carbonates performance led by Pepsi Max Benefiting from disciplined revenue management ➢ 2.2% ARP improvement in Q2 Pepsi Max ➢ Continued share gains in Q1 & Q2 ➢ Max remains the preferred no sugar cola in independent taste tests ➢ Max Cherry in dou
Slide 11: A platform for growth in Brazil
INTERNATIONAL EXPANSION A platform for growth in Brazil STRONG NATIONAL PRESENCE FRUIT SHOOT ROLLING OUT ➢ Brand portfolio and geographic footprint ➢ Successful launch in Sao Paulo city expanded following Bela Ischia acquisition supermarkets– weighted distribution >90% – R$10m synergies on track ➢ N
Slide 12: Building awareness & trial in the USA
INTERNATIONAL EXPANSION Building awareness & trial in the USA Multipack ➢ Retaining listings and expanding shelf space ➢ New flavour introduction – Fruit Punch ➢ Launching Hydro still and sparkling flavoured waters ➢ Ensuring consistent great in-store execution ➢ Scale critical to drive profitabilit
Slide 13: Approaching the halfway point of our GB business capability programme
BUILDING BUSINESS CAPABILITY Approaching the halfway point of our GB business capability programme ✓ Large PET line and warehousing fully operational • £240m capex F16-18 Leeds ✓ Small PET line in commission phase • Minimum 15% EBITDA return by 2020 ✓ 3 can lines in commission phase Rugby ✓ Aseptic
Slide 14: Building a sustainable business for the long term
TRUST AND RESPECT Building a sustainable business for the long term Healthy Healthy people planet ➢ 19bn calories removed from GB diets Supply chain investment yielding annually since 2013 benefits: ➢ Subway switching to Britvic delivering 3.7bn calorie reduction ➢ 155 tonne reduction in PET ➢ 83% G
Slide 15: Mathew Dunn: Strong first half performance
Mathew Dunn Strong first half performance Making life’s everyday moments more enjoyable 15
Slide 16: Core markets in growth, Brazil economy affecting performance
Core markets in growth, Brazil economy affecting performance GB IRELAND FRANCE BRAZIL ➢ Off-trade ➢ Off-trade in mid ➢ Off-trade ➢ Macro conditions category value single digit category in low adversely growing ahead growth digit growth affecting FMCG of volume ➢ Weakening of ➢ Buying group categorie
Slide 17: Strong first half performance
Strong first half performance +11.5% +6.7% (50)bps +9.2% (0.4)x +2.9% Group Group Group Adjusted Increase in Interim EBITA Revenue EBITA EPS of net debt to DPS Margin EBITDA £756.3m £73.6m 9.7% 18.9p 2.4x 7.2p Organic EBITA margin increased 10bps Numbers are at actual exchange rate. EBITA is defined
Slide 18: Healthy organic growth
Healthy organic growth Group revenue £752.1M +3.7% Group EBITA £73.1m +5.1% Group EBITA margin 9.7% +10bps Underpinned by revenue growth in all markets Numbers exclude Bela Ischia and are on a constant currency basis. EBITA is defined as operating profit before exceptional and other items and amorti
Slide 19: Business unit performance GB Carbs GB Stills
Business unit performance GB Carbs GB Stills Volume 2.1% 1.5% ARP per litre 0.4% (4.0)% Revenue 2.5% (2.6)% Brand contribution (3.0)% (4.0)% Brand margin % (220)bps (70)bps ➢ Led revenue management in carbonates category ➢ Stills returned to volume growth ➢ Winning and retaining major customers All
Slide 20: Business unit performance France Ireland
Business unit performance France Ireland Volume 3.2% 7.5% ARP per litre 3.2% (1.1)% Revenue 6.5% 13.3% Brand 3.8% 10.6% contribution Brand margin % (70)bps (80)bps ➢ Brands generated 62% of revenue in ➢ Acquisition of East Coast to support on- France trade growth in Ireland ➢ Pressade ‘Bonjour’ the
Slide 21: Business unit performance International Brazil
Business unit performance International Brazil Volume 0.5% (10.0)% ARP per litre 13.3% 15.6% Revenue 13.9% 4.0% Brand contribution 109.8% 3.3% Brand margin % 1500bps (20)bps ➢ USA benefiting from multipack ➢ Brand contribution growth despite launch and single serve growth challenging market conditio
Slide 22: Relentless focus on delivering cost efficiency
Relentless focus on delivering cost efficiency H1 17 H1 16* % organic constant £M £M exchange rate Total A&P spend 31.5 33.1 4.9 A&P % revenue 4.3% 4.7% (40)bps Non-brand A&P 5.4 6.6 18.2 Fixed Supply Chain 56.4 54.3 (3.9) Selling Costs 67.4 66.7 (1.0) Overheads & Other 71.2 73.1 2.6 Costs Total fix
Slide 23: Disciplined approach to cash management
Disciplined approach to cash management ➢ Improved H1 free cash flow despite increase in planned investments ➢ H1 net debt leverage 2.4x • Inventory high ahead of peak summer trading period • Planned additional stock build to mitigate risk of BCP implementation • £29.5m increase in capital spend as
Slide 24: Strong Balance Sheet underpins our capital allocation priorities
Strong Balance Sheet underpins our capital allocation priorities Strong long-term funding platform in place ➢ £958m total debt facilities • £400m RCF • £558m USPP debt – maturing 2025 to 2032 FY17 financial items guidance ➢ Capital spend will be in range of £145m to £155m for FY17 ➢ Effective tax ra
Slide 25: Strong financial performance
Strong financial performance Healthy growth in organic revenue and EBITA Increase of 2.9% in interim dividend Disciplined cost management continues Robust balance sheet Confident of delivering full year performance in line with market expectations Currency volatility adversely impacting f/x Making l
Slide 26: Simon Litherland: Summary Conclusions
Simon Litherland Summary Conclusions Making life’s everyday moments more enjoyable 26
Slide 27: Strategic momentum continues
Strategic momentum continues Proactive action to address industry challenges Strong organic and inorganic revenue growth Disciplined cost management continues Organic margin growth Continued focus on long term growth drivers Currency volatility adversely impacting f/x Committed to superior sharehold
Slide 28: APPENDIX
APPENDIX Making life’s everyday moments more enjoyable 28
Slide 29: A solid financial platform underpinning the strategy
A solid financial platform underpinning the strategy ✓ Additional £175m private placement funding ✓ £400m revolving credit facility extension to ✓ Maturing 2025 to 2032, Fixed and floating rate November 2021 ✓ Replacing £120m notes matured early 2017 ✓ Circa £958m total debt facilities from Feb 2017
Slide 30: Segmental analysis
Segmental analysis GB CARBS H1 2017 H1 2016 % VAR Volume 644.4 631.2 2.1% ARP per litre 46.7p 46.5p 0.4% Revenue 301.1 293.8 2.5% Brand contribution 114.2 117.7 (3.0%) Brand margin % 37.9% 40.1% (220bps) GB STILLS H1 2017 H1 2016 % VAR Volume 177.0 174.3 1.5% ARP per litre 81.3p 84.7p (4.0%) Revenue
Slide 31: Segmental analysis
Segmental analysis IRELAND H1 2017 H1 2016 % AER % CC Volume 112.0 104.2 7.5% 7.5% ARP per litre 54.7p 49.1p 11.4% (1.1%) Revenue 80.3 62.9 27.7% 13.3% Brand contribution 27.2 21.5 26.5% 10.6% Brand margin % 33.9% 34.2% (30bps) (80bps) FRANCE H1 2017 H1 2016 % AER % CC Volume 142.1 137.7 3.2% 3.2% A
Slide 32: Segmental analysis
Segmental analysis BRAZIL H1 2017 H1 2016 % AER % CC Volume 98.1 102.6 (4.4%) (4.4%) ARP per litre 71.5p 43.0p 66.3% 15.9% Revenue 70.1 44.1 59.0% 10.7% Brand contribution 14.4 9.1 58.2% 9.9% Brand margin % 20.5% 20.6% (10bps) (20bps) INTERNATIONAL H1 2017 H1 2016 % AER % CC Volume 19.0 18.9 0.5% 0.
Slide 33: Cash flow
Cash flow H1 2017 H1 2016 EBIT 68.3 65.4 Depreciation and amortisation 32.2 25.2 EBITDA 100.5 90.6 Working capital -12.8 -49.5 Capital spend -76.8 -47.3 Pension contributions -20.8 -20.8 Other spend -22.8 -19.9 Underlying free cash flow -32.7 -46.9 Dividends -45.9 -42.6 Adjusted net debt 572.8 438.9
Slide 34: Clear capital allocation priorities
Clear capital allocation priorities Profitable Growth Strong underlying FCF conversion A progressive Invest in business Selective M&A in Maintain long-term dividend policy capability core categories debt leverage within 1.5x to 2.5x range Delivering superior shareholder returns Making life’s everyda
Slide 35: 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 Making