China Resources Beer (holdings) Co. Ltd. · HKEX:291
China Resources Beer (holdings) — China Resources Enterprise — H1 2014 Earnings Presentation
34 slides from China Resources Beer (holdings)'s earnings presentation, Aug 21, 2014
Slide 1: Financial and operational review H1 2014
Financial and operational review H1 2014 Investor presentation 21 August 2014 1
Slide 2: Results Summary
Results Summary Q2 2014 Q2 2013 change H1 2014 H1 2013 change HK$m HK$m HK$m HK$m Turnover 41,694 , 35,704 , +17% 83,506 , 71,857 , +16% EBITDA - Basic 2,694 2,405 +12% 4,721 4,217 +12% EBITDA - Underlying* 2,440 2,388 +2% 4,462 4,200 +6% Earnings 573 506 +13% 13% 929 1,018 -9% 9% Underlying net pro
Slide 3: Turnover Breakdown - by Divisions
Turnover Breakdown - by Divisions Q2 Prop Q2 Prop change H1 2014 Prop H1 2013 Prop change 2014 2013 HK$m HK$m HK$m HK$m Core businesses Retail 24,508 58% 21,984 61% +11% 52,589 62% 47,907 66% +10% Beer 10 599 10,599 25% 9 530 9,530 27% +11% 18 475 18,475 22% 16 078 16,078 22% +15% Food 4,093 10% 2,5
Slide 4: Underlying Net Profit Breakdown - by Divisions
Underlying Net Profit Breakdown - by Divisions Q2 Prop Q2 Prop change H1 2014 Prop H1 2013 Prop change 2014 2013 HK$m HK$m HK$m HK$m Core businesses Retail (25) (6%) 99 19% -125% 439 52% 624 57% -30% Beer# 411 98% 381 72% +8% 417 49% 358 33% +16% Food (22) (5%) 14 3% -257% (72) (9%) 71 6% -201% Beve
Slide 5: Segment assets
Segment assets Unique with four consumer businesses complementing each other Distribution of segment g assets: Movement in balance sheet items 30 Jun 14 31 Dec 13 change HK$m HK$m Beer Assets: $60bn Total assets 179,990 155,289 +16% Total liabilities (108,367) (95,678) -13% 33% Liabilities: ($34bn
Slide 6: CAPEX
CAPEX Grasping opportunities through expansion 6.0 4.9 0.2 0.3 3.4 1.2## K$bn 0.4 3.0 02 0.2 HK 1.0 3.2 1.8# - H1 2014 H1 2013 Retail Beer Food Beverage # The CAPEX did not include CAPEX from Tesco JV of approximately $12.8bn. ## The CAPEX did not include Kingway acquisition of approximately $6.1b
Slide 7: Retail
Retail Growth through: Multi-format with regional leadership Q2 Q2 Change H1 2014 H1 2013 change 2014 2013 HK$ HK$m HK$ HK$m HK$m HK$m Turnover 24,508 21,984 +11% 52,589 47,907 +10% Underlying EBITDA # 618 725 -15% 5% 1,894 1,949 -3% 3% Underlying net profit # (25) 99 -125% 439 624 -30% Underlying
Slide 8: Retail geographical distribution of retail network
Notation: Retail shop no. (no. of hypermarket) [addition in past 12 months] Region Northern areas Retail New region 4 (4) [-] Inner Mongolia Growth through: Multi-format with regional leadership 4 (4) [-] Jilin Geographical distribution of retail network 144 (12) [9] Beijing Northern west areas Ha
Slide 9: Retail Synergy: Multi-format experience
Retail Growth through: Multi-format with regional leadership Synergy: Multi-format experience Leveraging global and local expertise to extend multi-format strategy Hypermarket Global expertise in Tesco Extra Standard operating multiple supermarket retail formats Tesco Convenience Superstore store
Slide 10: Retail Win-win strategy: Advanced knowledge with local network
Retail Growth through: Multi-format with regional leadership Win-win strategy: Advanced knowledge with local network Establishing a Joint Task Force Key focus areas The Joint Task Force comprising 1 Improving Tesco China management from CRV and Tesco 2 IT Facilitate smooth integration g of the
Slide 11: Retail: Winning market share by multiple-format
Retail Growth through: Multi-format with regional leadership Business model Winning market share by Multiple-format Multiple format store approach Multiple distribution centres (more than 16 D.C.) Trade-upp strategy gy Innovative in format Regional focus "Get Ready for the next journey"
Slide 12: Retail
Retail Growth through: Multi-format with regional leadership In a shopping mall In a city 6 formats in Guangzhou 5 formats in Beijing 5 formats in Nanjing: Taikoo Hui (Swire properties): Galleria (CR Land): "Get Ready for the next journey" 12
Slide 13: Beer (No.1 brand by volume in the world since 2008)
Beer (No.1 brand by volume in the world since 2008) Growth through: Solidifying market leader position and upgrade of product mix Q2 Q2 change H1 2014 H1 2013 change 2014 2013 HK$m HK$m HK$m HK$m Sales volume (million KL) 3.73 3.46 +8% 6.30 5.76 +9% Turnover 10,599 9,530 +11% 11% 18,475 16,078 +15
Slide 14: Beer: Geographical distribution of the breweries
Beer (No.1 brand by volume in the world since 2008) Growth through: Solidifying market leader position and upgrade of product mix Geographical distribution of the breweries 5(1.1mkl) [-] Heilongjiang gj g Having presence in 25 out of 34 regions/cities (incl (incl., autonomous regions regions, muni
Slide 15: Beer: China beer market share
Beer (No.1 brand by volume in the world since 2008) Growth through: Solidifying market leader position and upgrade of product mix Distribution of China beer market share: Total market share of top 4 players was 61% in 2012, of which Snow has 22%. 23% 100% 18% 20% 21% 21% 22% In 2013 80% 14% 14% 14
Slide 16: Beer: Strong robust growth in turnover and profitability
Beer (No.1 brand by volume in the world since 2008) Strong robust growth in both turnover and profitability UNP Turnover In HK$’m In HK$’m 40,000 1,000 800 30,000 600 20,000 400 10,000 200 - - 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 "Get
Slide 17: Food
Food Growth through: Quality premium products Q2 Q2 change H1 2014 H1 2013 change 2014 2013 HK$ HK$m HK$ HK$m HK$m HK$m Turnover 4,093 2,571 +59% 8,035 5,004 +61% EBITDA 98 109 -10% 10% 167 251 -33% 33% Earnings (22) 14 -257% (72) 71 -201% EBITDA margin (%) 2.4 4.2 -43% 2.1 5.0 -58% Net margin (%)
Slide 18: Food: Supply base distribution
Food Growth through: Quality premium products Supply base distribution Heilongjiang Having presence in 14 out of 34 regions/cities (incl. autonomous regions, municipalities and SAR) in China Liaoning Shaanxi Henan Sichuan Jiangsu Hubei Guangxi Sh Shanghai h i Zhejiang Jiangxi Fujian Notation: Supp
Slide 19: Beverage
Beverage Growth through: strong partnership with Kirin Q2 Q2 change H1 2014 H1 2013 change 2014 2013 HK$ HK$m HK$ HK$m HK$m HK$m Sales volume (million KL) 1.82 1.30 +40% 3.22 2.27 +42% Turnover 2 798 2,798 1 922 1,922 +46% 5 057 5,057 3 375 3,375 +50% EBITDA 156 92 +70% 212 134 +58% Earnings (#) 9
Slide 20: Beverage: Geographical distribution
Beverage Growth through: strong partnership with Kirin Geographical g p distribution Having presence in 15 out of 34 regions/cities (incl. autonomous regions, municipalities and SAR) in China Number of beverage plant: 44 (10 own factories; 34 OEM factories*) 2* Beijing 2* Liaoning 2* Chongqing 2*
Slide 21: Appendix I – Details of Retail formats
Appendix I – Details of Retail formats 30 Jun 14 31 Dec 13 30 Jun 13 App. Average Major % of Average Self- Self- Self- Format brands areas turnover GP operated Franchised operated Franchised operated Franchised (sq.m) margin Over I. Hypermarket 6,000 6 000 app.77% 20% 693 13 563 13 533 13 II. Standa
Slide 22: Appendix II – Historical track record of CRE
Appendix II – Historical track record of CRE Strong growth momentum in each businesses Retail (incl. investment property, Beer excl.l non-core assets) t ) HK$’mn HK$’mn HK$’mn HK$’mn 100,000 900 40,000 1,000 800 80,000 700 800 30,000 600 60,000 600 500 400 20,000 40,000 400 300 20,000 200 10,000 2
Slide 23: Appendix III – Historical operating summary
Appendix III – Historical operating summary Increasing market share and net asset without share dilution in past 4 years HK$/share HK$’m 20 9,000 18.34 15 16 97 16.97 15.77 13.40 6,000 8 425 8,425 10 7,099 7,501 6,159 5 3,000 2010 2011 2012 2013 Underlying EBITDA Net asset per share "Get Ready for
Slide 24: Appendix IV – Strong growth in China
Appendix IV – Strong growth in China Strong growth in China According to McKinsey, top 225 cities of China will contribute app. 30% of global GDP growth in the next 10-15 years. Mega- and middleweight developing world cities: Mega- and middleweight developed cities: 45% of global growth 16% of glo
Slide 25: Appendix V – Better position for CRE
Notation: CRE’s CRE s presence Cluster’s Cluster s hub city Appendix V – Better position for CRE Expected cluster size: Small Sizable Mega Better positioning to capture strong growth in China According to McKinsey, more than 90% of China’s urban GDP in 2015 will come from 22 clusters. Huhehaote Ch
Slide 26: Appendix VI – Experience in Homeworld's turnaround
Appendix VI – Experience in Homeworld’s turnaround Management with experience and abilities to turnaround of loss-making acquisition in retail business: Net Profit (HKD mn) 200 51 -563 563 -63 -38 38 0 2007 2008 2009 2010 -200 -400 -600 "Get Ready for the next journey" 26
Slide 27: Appendix VII – Market share of Retail business
Appendix VII – Market share of Retail business Lower market concentration in China than other developed countries: Percentage of top 5 retailers to total grocery retail market share in the state: 63 60 59 47 40 20 9 7 Top ten Top five Source: Euromonitor; Planet Retail; McKinsey and Company data ret
Slide 28: Appendix VIII – Historical major M&As in beer business
Appendix VIII – Historical major M&As in beer business Strong bargaining power and lower acquisition cost on M&A CRB acquired 100% stake in Kingway beer US$/kl AB InBev acquired furhter Carlsberg acquired Tsingtao acquired ABInbev 2,500 1.31% stake of Zhujiang Shenzhen Jingyalong 12.25% stake in 100
Slide 29: Appendix IX – Global beer consumption summary
Appendix IX – Global beer consumption summary Beer consumption per capita in China increased double in past 10 years (from 18 litres in 2001 to 36 litres in 2011 (provisional)). 147 111 78 78 75 60 46 37 36 22 22 Czech Germany USA Australia UK South Japan South China Taiwan Hong Republic Africa Kore
Slide 30: Appendix X – CRE awards
A Appendix di X – CRE awards d Highlights of accolades received Since 2002 Produced quarterly financial and operational review on a voluntary basis. First conglomerate company among the constituent stocks in the Hang Seng Index to initiate such a move 2005-2012 Named one of outstanding enterprises
Slide 31: Appendix X – CRE awards (Cont'd)
A Appendix di X – CRE awards d (Cont'd) (C t'd) Highlights of accolades received 2010-2013 Received awards for cover photo/design in the categories of food distributors, processors & wholesalers, manufacturing & Distributing, Food & Consumer Packaged Goods and Multi- Industry – Products & Services
Slide 32: Appendix X – CRE awards (Cont'd)
A Appendix di X – CRE awards d (Cont'd) (C t'd) Highlights of accolades received 2011-2014 Awarded as one of the companies receiving the commendation in Corporate Social Responsibility Award by CAPITAL and CAPITAL Weekly 2011–2013 Ranked number 39 /46/37 in Fortune China 500 2011 Received 2 best a
Slide 33: Appendix X – CRE awards (Cont'd)
A Appendix di X – CRE awards d (Cont'd) (C t'd) Highlights of accolades received 2013 Mr. Frank Lai was selected as Asian Company Secretary of the Year by Corporate Governance Mr Asia th 2013 Received award as the Winner of Global Top Mid-Cap and ranked 19 in Global Top 50 Gold in IR Magazine 2013
Slide 34: Disclaimer
Disclaimer Data and information contained in this presentation is provided for informational purposes only. Neither Chi Resources China R E t Enterprise, i Li it d nor any off its Limited it subsidiaries b idi i shall h ll be b liable li bl for f any errors or delays d l i in the content, or for any
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