East African Breweries Plc · NSEKE:EABL
East African Breweries — FY2011 Earnings Presentation
32 slides from East African Breweries's earnings presentation, Aug 26, 2011
Slide 1: F'11 Full Year Results Investor Briefing
EAST AFRICAN BREWERIES LIMITED F’11 Full Year Results Investor Briefing Seni Adetu – Group Managing Director & CEO Peter Ndegwa – Group Finance Director 26th August 2011 EABL FY--F11 Investor Presentation
Slide 2: Our vision
Our vision EABL is the most celebrated business in every market in Eastern Africa Our Intent… 9 Employer of choice 9 Delivering superior total shareholder returns 9 Force for good in every market in East Africa EABL FY--F11 Investor Presentation
Slide 3: Business Update
Business Update Group MD and CEO Mr. Seni Adetu EABL FY--F11 Investor Presentation
Slide 4: Macroeconomic and political environment showed mixed fortunes in F'11
Macroeconomic and political environment showed mixed fortunes in F’11 Positive GDP Growth Upside > Positive economic growth across East Africa but, sluggish in H’2 > Increased infrastructural development > Increased FDI in the region > Emerging middle class population > Increased investor confidence
Slide 5: F'11 Operating environment: other challenges across the region
F’11 Operating environment… we faced other challenges across the region ADCA* last November in Kenya and loss of sachets in Uganda Pricing in Kenya to recover excise tax impact, in spite of depressed consumer disposable income Intense competition in Uganda, Tanzania and S. Sudan Forex scarcity in S.
Slide 6: Our business is stronger today as shown by organic results
Notwithstanding, our business is stronger today as shown by our organic business results… M KES F’11 % vs PY Headlines > Expanded volume in the Beer and Sales Volume 7,698 kEus +8% spirits categories > NSV growth largely driven by price Net Sale Value 40,918 +6% and brand mix > Reinforced our focus
Slide 7: On an inorganic basis (consolidating SBL)
On an inorganic basis (results consolidating SBL)… M KES F’11 % vs PY Headlines > Includes SBL performance for Sales Volume 8,263 kEus +15% last 8 months Net Sale Value 44,895 16% > Significant spend in SBL on ª Integration Marketing Spend 3,491 +36% ª Governance and Compliance COGs 22,831 +17% ª Ca
Slide 8: With SBL – EABL well poised to consolidate its position
With SBL – EABL well poised to consolidate its position… EABL acquired 51% equity stake in SBL in November 2010 SBL is clearly a future driver of growth 2nd largest beverage alcohol company in Tanzania Expanded, popular and adored portfolio brands (PSL, Tusker, Guinness etc.) 3 Functioning bre
Slide 9: All our core brands grew over LY on impactful commercial interventions
All our core brands grew over LY on impactful commercial interventions >Tusker Project fame 4 & Tusker All Stars >Tusker CECAFA East Africa football challenge >Brand Mentorships & consumer experience for Johnnie Walker >Smirnoff cocktails experience & outdoor campaigns +5% +3% >Senator Keg footprint
Slide 10: The commercial interventions
The commercial interventions… EABL FY--F11 Investor Presentation
Slide 11: Supported by strategic CAPEX investment & cost-value management
Supported by strategic CAPEX investment & cost-value management Supply Chain Excellence Sorghum Agenda New Moshi Brewery New Line 4 - Uganda Cost-value Management CAPEX investments > Supply chain optimisation – Logistics and > Commissioning of Moshi brewery in warehousing outsourced Tanzania > Sorgh
Slide 12: Key People Initiatives
Bolstered by an engaged and capable workforce and improved organisational effectiveness All Staff Conference forum Team –building Sessions Restructured organization – simpler, faster, better service delivery All Staff conference – Tanzania team joining for the first time Increasing employee en
Slide 13: We reinforced our "force for good" positioning in the community
and we reinforced our “force for good” positioning in the community… Environment Skills for Life > Water of life program - Provided for over Responsible Drinking 690,000 people this year alone > Environment – E green team eg. save the Mau, Karura forest campaigns > Skills for life initiative – Schol
Slide 14: Summary for F'11 achievements
Summary for F’11 achievements… Delivered positive growths in volume (+8%), NSV (+6%) and OP (+17%) on our organic business. Spirits portfolio grew at +56% Group wide, with all businesses showing different levels of growth in this category. We have seen a turnaround in Uganda with strong volume, shar
Slide 15: Forging ahead
Forging ahead EABL FY--F11 Investor Presentation
Slide 16: The future remains strongly positive given economic outlook
The future remains strongly positive given economic outlook in Sub-Saharan Africa and our strong company fundamentals GDP Closer Home--Sub Saharan Inflation, Population forecast Market 2011 2012 Inflation Population Inflation Population Kenya 15% 40m 10% 41m Uganda 16% 33m 12% 35m Tanzania 14% 43m 1
Slide 17: Positioned to continue delivering superior shareholder value
We are positioned to continue delivering superior shareholder value… By Leveraging on Overcoming & ª Growing economies ª Regulatory concerns ( Excise Tax/ Alcohol Act/ ª Increasing population, growing middle class Anti-Trust laws) & affluence ª Fiscal pressures in our markets ª Increased integration
Slide 18: Our vision and strategic imperatives will provide impetus for future growth
Our vision and consistently dynamic strategic imperatives will provide the impetus for future growth Purpose Celebrating life everyday, everywhere Vision The Most Celebrated Business in Every Market in Eastern Africa Strategic Amazing Great Times, Enriched Relationships Focus Areas Bringing Out the
Slide 19: Financial Update
Financial Update Group FD – Peter Ndegwa EABL FY--F11 Investor Presentation
Slide 20: Sustained Performance in a tough environment
Sustained Performance in a tough environment… > Solid Spirits performance in Kenya > Rebound of Uganda business in H2 + > Enhanced Cost management > Acquisition of SBL > Good management of working capital >Tough Regulatory Landscape - >Higher excise taxes on beer in Kenya > Depressed Economic landsc
Slide 21: Solid organic operating profit delivery
Solid organic operating profit delivery… Key KPI performance vs. LY 17% 8% 6% Volume NSV OP > Volume growth driven by spirits and turnaround in UBL > NSV increase on the backdrop of selective pricing & mix > Improved gross margins with aggressive COGS focus > SOA in TBL not recognised in F11 EABL FY
Slide 22: Inorganic results including SOA & SBL
Inorganic results...Including SOA & SBL Key KPI performance including SBL vs. LY 10% Volume NSV OP > Increased volume contribution > Positive contribution by SBL to NSV (9% contribution) > SBL Integration costs - impact on operating profit EABL FY--F11 Investor Presentation
Slide 23: Great COGS delivery, +2 points growth in operating margins
Great COGS delivery, resulting in +2points growth in operating margins Total COGS 2% 2% COGS growth versus 8% volume growth > Local cereals availability in market Key COGS > Improved operating line efficiencies Drivers > Hedging key input materials (sugar, fuel oil) > Reduced waste through better op
Slide 24: Kenya: Solid spirits performance, flat beer out-turn
Kenya: Solid spirits performance, flat beer out-turn Kenya- Beer 2% > Large tax increase in beer – -1% rate for malt and non malt 2% harmonised Vol Eus 'k > Impact of ADCA NSV Kes 'm OP Kes 'm > Tactical pricing to deliver F10 F11 NSV growth Kenya- Spirits 58% 64% > Stable tax regime in spirits 78%
Slide 25: Uganda: A tale of two halves
Uganda: A tale of two halves, significant turnaround in H2 F11- H2vs H1 -2% 69% > Investment in new packaging line resulted in improved Vol Eus 'k NSV Kes 'm product availability OP Kes 'm > Enhanced line efficiencies H1 H2 > Re-launched Bell in new pack H1-F11 vs F’10 > Better cost management 14% (
Slide 26: EABLi: A challenging year but promising future
EABLi: A challenging year but promising future Great Lakes Region (GLR) 3% > Impact of uncertainty over referendum -10% > Scarcity of forex -1% constraining trading > Improved performance in H2 > New Nation in SoSS – future Vol Eus 'k NSV Kes 'm more optimistic OP Kes 'm F10 F11 EABL FY--F11 Investo
Slide 27: Tanzania: SOA excluded, SBL consolidated
Tanzania: SOA excluded, SBL consolidated • We have not recognised share of associates in F11 – reclassified as available for sale [2010: Kshs 1.1bn) • Shareholding in TBL in the process of disposal through a public offer for sale – expected to complete by October • Acquired 51% stake in SBL for Kshs
Slide 28: Detailed results
Detailed results… East African Breweries Limited Financial Report for the year ended 30 June 2011 (Audited) Consolidated Profit and Loss Account Year ended Year ended 30-Jun-11 30-Jun-10 Kshs M Kshs M Change % Net Revenue 44,895 38,679 16% Cost of Sales (22,831) (19,537) 17% Gross profit 22,064 19,1
Slide 29: Our Proposed Dividends
Our Proposed Dividends… F’11 F’10 Kshs per share Kshs per share Interim Dividend 2.50 2.50 Final Dividend 6.25 6.25 Total Dividend 8.75 8.75 EABL FY--F11 Investor Presentation
Slide 30: In summary
In summary Strong financial performance in F11 with NSV, PBIT and cash growth vs LY: On an organic basis: ª Volume = 8% ª NSV = 6% ª PBIT = 6% (Operating Profit of +17%, and PBIT of 6%) This performance was driven by: ª Fantastic growth in our Brands ª Increased investment in A&P and Capex ª Conti
Slide 31: Welcome Q&A Session
EABL F’11 Full Year Results Investor Briefing Welcome Q&A Session EABL FY--F11 Investor Presentation
Slide 32: Thank You
EABLL F’11 Full ull Year eaa Results s Investor nvestor esto orr Briefing o Brie e efing HANK HA AN YOU A THANK YO OU 26th August 2011 2 EABL FY--F11 Investor Presentation
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