Britvic — H1 2006 Earnings Presentation
40 slides from Britvic's earnings presentation, May 25, 2006
Slide 1: Interim Results Presentation
Interim Results Presentation 25 May 2006
Slide 2: Gerald Corbett, Chairman
\I BRITVIC pic Gerald Corbett Chairman
Slide 3: John Gibney, Finance Director
John Gibney Finance Director
Slide 4: Financial Headlines
Financial Headlines H1 06 H1 05 % Change £’m £’m Branded Revenue 323.5 341.5 (5.3) EBITDA 43.4 47.9 (9.4) EBIT 18.6 22.7 (18.1) Earnings per share 3.0p 4.3p (30.2) Free cash flow (42.3) (69.8) 39.4 Interim dividend per share of 3p Note: all numbers exclude the effect of the discontinued Private Labe
Slide 5: Summary H1 06 – Operating Profit
Summary H1 06 – Operating Profit H1 06 H1 05 % Change £’m £’m Branded Volume (million litres) 645.4 678.4 (4.9) Average Realised Price (ARP) per litre 50.1 50.3 (0.4) Branded Revenue 323.5 341.5 (5.3) Brand Contribution 133.2 149.8 (11.1) Non brand A & P (3.5) (5.0) 30.0 Fixed Supply Chain (36.1) (3
Slide 6: Carbonates
Carbonates H1 06 H1 05 % Change £’m £’m Litres 415.6 448.0 (7.2) ARP per litre 38.5p 39.2p (1.8) Revenue 159.8 175.6 (9.0) Brand Contribution 60.6 71.8 (15.6) Brand Contribution Margin 37.9% 40.9% (3.0) Direct product costs increased by 3.3%
Slide 7: Stills
Stills H1 06 H1 05 % Change £’m £’m Litres 213.8 213.1 0.3 ARP per litre 71.9p 72.8p (1.2) Revenue 153.7 155.2 (1.0) Brand Contribution 69.9 74.8 (6.6) Brand Contribution Margin 45.5% 48.2% (2.7) Direct product costs increased by 4.6%
Slide 8: International
International H1 06 H1 05 % Change £’m £’m Litres 15.9 17.3 (8.1) ARP per litre 62.3p 61.9p 0.6 Revenue 9.9 10.7 (7.5) Brand Contribution 2.8 3.2 (12.5) Brand Contribution Margin 28.3% 29.9% (1.6) Direct product costs increased by 4.2%
Slide 9: Overheads and other Costs
Overheads and other Costs H1 06 H1 05 % Change £’m £’m Non Brand A&P (3.5) (5.0) 30.0 Total A&P spend (23.3) (25.4) 8.3 A&P as % Net Revenue 7.2% 7.4% Fixed Supply Chain (36.1) (36.3) 0.6 Selling Costs (44.2) (48.8) 9.4 Overheads & Other (30.8) (37.0) 16.8 Total (114.6) (127.1) 9.8
Slide 10: Operating Profit to Earnings
Operating Profit to Earnings H1 06 H1 05 % Change £’m £’m Operating Profit 18.6 22.7 (18.1) Interest (9.2) (8.8) (4.5) Profit before tax 9.4 13.9 (32.4) Tax (2.9) (4.3) 32.6 Profit after tax 6.5 9.6 (32.3) Note: all numbers exclude the effect of the discontinued Private Label Water business and are
Slide 11: Exceptional Items
Exceptional Items H1 06 H1 05 H1 06 £’m Cash items IPO Costs 5.4 Restructuring costs 2.6 8.0 Share items Plc Launch share plan 1.2 All employee share offer* 2.8 12.0 Non cash items Wind up of IHG share options 2.6 Total exceptional items 14.6 Total exceptional items after tax 12.0 *£300k purchased r
Slide 12: Improving Cash Position and Reducing Working Capital
Improving Cash Position and Reducing Working Capital H1 06 H1 05 % Change £’m £’m Operating Profit pre exceptionals 18.6 22.7 (18.1) Depreciation 24.8 25.2 (1.6) EBITDA 43.4 47.9 (9.4) Working Capital (16.5) (38.2) 56.8 Capital Expenditure (27.4) (30.1) 9.0 Pension contribution (30.0) (30.0) - Other
Slide 13: Dividends
Dividends Interim dividend of 3 pence per share payable 7th July 2006 Final Dividend payable in February 2007 Progressive dividend policy underpinned by a strong and improving cashflow
Slide 14: Summary
Summary A difficult market impacting revenue and profit A&P spend maintained Further cost reductions being delivered Improved cashflow Dividend per share in line with expectations
Slide 15: Paul Moody, Chief Executive
\I BRITVIC pic Paul Moody Chief Executive
Slide 16: Agenda
Agenda Market remains difficult Current trading Management action: Costs and cash Revenue Innovation
Slide 17: Soft Drinks Market Volume
Soft Drinks Market Volume 200,000 180,000 Volume Thousand Litres 160,000 2003/04 140,000 2004/05 2005/06 120,000 100,000 80,000 k1 k4 k7 2 0 3 6 3 9 2 5 8 1 4 7 0 6 9 k5 k1 k1 k1 k1 k2 k2 k2 k3 k3 k3 k4 k4 k4 k4 W W W W W W W W W W W W W W W W W W Source: ACNielsen Scantrack March 2006: Take Home Ma
Slide 18: Carbonates Volume: H1
Carbonates Volume: H1 110,000 2004/05 2005/06 100,000 90,000 Volume Thousand Litres 80,000 70,000 Easter 60,000 50,000 40,000 7 9 1 1 3 5 7 3 5 k1 k3 k5 k7 k9 k1 k2 k1 k2 k2 k2 k1 k1 k1 W W W W W W W W W W W W W W Source: ACNielsen Scantrack March 2006 Take Home Market broadly tracked prior year pre
Slide 19: Stills Volume: H1
Stills Volume: H1 100,000 2004/05 2005/06 Volume Thousand Litres 80,000 Easter 60,000 40,000 1 5 1 5 3 7 9 3 7 k1 k3 k5 k7 k9 k1 k1 k1 k1 k1 k2 k2 k2 k2 W W W W W W W W W W W W W W Source: ACNielsen Scantrack March 2006: Take Home Stills volume consistently ahead of prior year in build to Christmas
Slide 20: Relative Size of Categories and Growth
Relative Size of Categories and Growth Cola +2.6 % -5.2% -1.2% Fruit Carbs +17.4% -24.8% -13.7% Carbs Lemonade -5.8% -5.2% -5.5% Non Fruit Carbs +13.3% -7.7% -3.9% Functional +15.0% Water +6.8% Pure Juice +7.0% Squash +8.0% -4.2% +3.3% Stills Juice Drinks -0.7% +8.0% +5.6% Mixers -0.3% +1.0% +0.5% D
Slide 21: Changes in the customer base and pricing landscape
Changes in the customer base and pricing landscape Increased intensity in market share battle between retailers: Negotiations around ongoing investment levels Promotions: depth, frequency & uplift Structural changes: Ownership Product ranging Promotional strategy Pricing volatility: Competitor react
Slide 22: Current Trading – 4 weeks to 14 May 2006
Current Trading – 4 weeks to 14 May 2006 Market performance for 4 weeks to 13 May 2006 Carbonates Down 4% Stills Up 5% Branded Revenue for the 4 weeks to 14 May 2006 Total revenue down 4% Carbonates revenue down 14% Stills revenue up 9%
Slide 23: Management Actions
og BRITVIC Management Actions
Slide 24: Costs and cash
Costs and cash Aggressive cost cutting agenda driven by the Business Transformation Programme £4m saving in H1 £6m saving to come in H2 Re-engineering of products to mitigate input price rises £2m saving for full year Reduced capital requirement £10m reduction in full year forecast A focus on workin
Slide 25: Revenue: ARP
Revenue: ARP Deployment of new systems: Improved planning, execution and measurement of promotions More efficient use of resource through integrated systems Reduced administration Return on Revenue Investment Working hard to improve returns on Revenue Investment
Slide 26: Revenue: Core Brand Activity - Pepsi World Cup
Revenue: Core Brand Activity - Pepsi World Cup Sponsors of Team England taking Pepsi Max to the World Cup Campaign features: Win an Exclusive X-Box 360 every 90 minutes TV advertising and online-PR support Pepsi Max leading no-added sugar cola Focusing on ‘Better for you carbonates’ through the Worl
Slide 27: Revenue: Core brand activity - Robinsons Wimbledon
Revenue: Core brand activity - Robinsons Wimbledon Focus on leading the category Campaign features the chance to win exclusive tickets to Wimbledon TV and advertising support featuring Tim Henman and Andy Murray Britvic’s biggest Wimbledon campaign ever – with coverage across the Robinsons portfolio
Slide 28: Revenue: Core Brand Activity - J20/Summer of Juice
Revenue: Core Brand Activity - J20/Summer of Juice An on –premise focused campaign across all Britvic Juice brands Led by J20 Featuring Britvic 55 and Juices Range Launch support for new Pressed & Squeezed juices Leverage Brand communications and platforms Win tickets to the Little Britain tour with
Slide 29: International
International Robinsons new in Scandinavia with a fully supported plan Denmark, aggressive rollout plan 50% base, rising to 75% on promotion Sweden, slower rollout plan Currently 18% distribution Further distribution expected this year following current trials Fruit Shoot in Holland continues
Slide 30: Innovating into key areas of focus
Innovating into key areas of focus Cola +2.6 % -5.2% -1.2% Fruit Carbs +17.4% -24.8% -13.7% Carbs Lemonade -5.8% -5.2% -5.5% Non Fruit Carbs +13.3% -7.7% -3.9% Functional +15.0% Water +6.8% Pure Juice +7.0% Squash +8.0% -4.2% +3.3% Stills Juice Drinks -0.7% +8.0% +5.6% Mixers -0.3% +1.0% +0.5% Diet/
Slide 31: Innovation: Speed to market is crucial
Innovation Speed to market is crucial Fruit Shoot H2O leveraging the leading kids diet brand Concept July 05 – launch April 06 – 9 months Distribution in Grocers 38% at beginning May, rising to 70% by end of May Britvic Pressed and Squeezed – not from concentrate pure fruit juice Concept February 20
Slide 32: 05/06 launches: Entry into the water market
05/06 launches Entry into the water market Pennine Spring Replaced previous factored brand Expanding within On Premise, Vending, Chillers, and Grocery Drench: targeting urban youth on the go market Advertising campaign to run March through summer 30,000 points of distribution achieved - rate of sale
Slide 33: 05/06 launches: Better For You Juice Drinks & Functional
05/06 launches “Better For You” Juice Drinks & Functional Britvic Pressed and Squeezed – not from Concentrate pure fruit Juices launched in the On Premise in March J20 to be expanded into PET format from June Robinsons large pack strategy on target for production in September Well executed entry int
Slide 34: 05/06 launches: Better For You Carbonates
05/06 launches “Better For You” Carbonates Pepsi Brand support focused on driving Pepsi Max Pepsi Max Cino 7-UP Free Two new Tango Clear flavours Carbonates focus on driving Non Added Sugar
Slide 35: Innovation: Tracking the key trends impacting our industry
Innovation Tracking the key trends impacting on our industry… Time Changing Families, Consumer Themes Compression Changing Roles Health Added value and Nutrition Premiumising Individualism, Age complexity, Gender complexity Time Elaboration Realness &Integrity Sensory Naturalness perception Wellbein
Slide 36: Summary
Summary A difficult market A focus on costs and cash Actions to improve price and revenue Long term brand building Investment in International expansion Accelerating innovation Deliver an improved second half performance
Slide 37: Supplementary Information
\I BRITVIC pic Supplementary Information
Slide 38: Summary FY05 – Operating Profit
Summary FY05 – Operating Profit H1 06 H2 05 FY 05 £’m £’m £’m Volume (million litres) 678.4 697.1 1375.5 Average Realised Price (ARP) per litre 50.3 50.8 50.6 Branded Revenue 341.5 354.3 695.8 Brand Contribution 149.8 149.2 299.0* Non brand A & P (5.0) (1.6) (6.6) Fixed Supply Chain (36.3) (29.9) (6
Slide 39: Cost reduction programme FY06
Cost reduction programme FY06 H1 06 H2 06 FY 06 £’m £’m £’m Selling Costs 1 2 3 Overheads and other 3 4 7 EBIT 4 6 10
Slide 40: Reconciliation between H105 proforma and H105 statutory numbers
Reconciliation between H105 proforma and H105 statutory numbers H105 Proforma PLW H105 Statutory* Adjustments* Adjustments* Proforma £’m £’m £’m £’m Revenue 343.1 (1.6) 341.5 Operating Profit 24.1 (1.0) (0.4) 22.7 Finance Income 0.2 0.2 Finance Cost (0.4) (8.6) (9.0) Profit before Tax 23.9 (9.6) (0.