Savola Group · TADAWUL:2050
Savola — Q2 2015 Earnings Presentation
61 slides from Savola's earnings presentation, 2015
Slide 1: Focusing Delivering
rocusing Delivering
Slide 2: Agenda
Agenda… 1 2 3 4 Overview Our Businesses: Financials Intangibles Current Position & Future Direction
Slide 3: History – Key Development Stages
History – Key Development Stages • Started Jeddah • Entered oil business in • Established with • Entered sugar Plastics factory Iran (Acquisition), a paid up capital refining • Acquired 40% stake in Morocco (Greenfield), of SR 40m business in KSA Almarai Sudan (Greenfield), Kazakhstan (Acquisition)
Slide 4: History – Key Development Stages
History – Key Development Stages • Acquired Pasta business in Egypt, • Issued Sukuk worth SAR 1.5 bln • Started sugar and oil commercial the largest acquisition made by • Purchased Al-Muhaidib’s stakes in production in Egypt and Algeria, resp. SFC (10%) and Panda (18.6%) by • Acquired oil business i
Slide 5: History – Key Development Stages
History – Key Development Stages Today Savola Group is one of the top Food and Retail player in the MENA region with leading brands
Slide 6: Key Facts
Key Facts Around 29,200 Net Sales of Employees SAR 26.6 bln at end of 2014 in 2014 Countries of Market Operations: 8+ capitalization of SAR 38 bln as of 28th July 2015
Slide 7: Our Businesses
Our Businesses Foods Retail (Edible Oils, Sugar, Pasta) (Hypermarkets & Supermarkets) 2014 Revenue SAR 14.6 bln 2014 Revenue SAR 12.2 bln Investments (Strategic and Non-core) Value of over SAR 21 bln
Slide 8: Our Businesses
Our Businesses Revenue by Sector *Total: SAR 25.3 bln *Total: SAR 26.6 bln 2013 2014 42.9% 45.5% Foods 57.1% 54.5% Retail Note: Packaging sector was deconsolidated in 2014 as SPA was signed to sell Savola’s packaging business. Revenue from packaging sector was SAR 1.12 billion in 2013 *Total Revenue
Slide 9: Our Key Strengths
Our Key Strengths Broad and diversified geographic footprint and product offering Extensive consumer and Market leader in high market understanding growth and fragmented markets Resilient business model Excellent brand awareness based on stable revenue in all markets that Savola is generation by ser
Slide 10: Our Goals
Our Goals Continue to grow by investing in and Increase profitability focusing on core sectors Maximize total shareholders’ return Give more autonomy to subsidiaries to prepare them for Reallocate cash potential spin-offs invested from non-core investments to core sectors Increase dividends
Slide 11: Our Businesses
2 Our Businesses Current Position & Future Direction
Slide 12: Savola Foods Co.
Savola Foods Co.
Slide 13: SFC Market Leadership
SFC Market Leadership Offering KSA Egypt Iran Turkey Algeria Sudan Morocco Oil Ghee Sugar Pasta SFC is a market leader in all the countries we operate in
Slide 14: SFC Brands
SFC Brands 1.5 Revenue SAR Bn. 1 0.5 0 Rawaby Ganna Maleka Bahar Osra Yudum Afia Ladan/Gold We have created strong unique brands across the region
Slide 15: Oil Value Chain
Oil Value Chain Raw materials Offering Palm oil Refining Packaging B2B/ Export Corn oil Sunflower oil Soya oil B2C
Slide 16: Sugar Value Chain
Sugar Value Chain Raw materials Offering Raw Cane 91% Refining Sugar B2B/ Export 9% Beet B2C
Slide 17: Pasta Value Chain
Pasta Value Chain Raw materials Offering Processing Unbranded 100% Wheat Branded
Slide 18: Financial Performance
Financial Performance CAGR Revenue 5% Net income 27% 626 631 610 489 234 16,389 15,224 14,552 14,592 12,026 2010 2011 2012 2013 2014 Revenue (SAR millions) NI (SAR millions)
Slide 19: Revenue Breakdown
Revenue Breakdown SFC Revenue Breakdown by Category 2013 & 2014 Total Revenue SAR 14.5 bln Total Revenue SAR 14.6 bln 2013 2014 3.2% 3.4% Oil 30.2% Sugar 32.6% Pasta 66.6% 64.0%
Slide 20: Revenue Breakdown
Revenue Breakdown SFC Revenue Breakdown by Geography, 2013 & 2014 Total Revenue SAR 14.5 bln Total Revenue SAR 14.6 bln 2013 2014 4.2% 2.0% 1.9% 2.2% 0.9% KSA 0.2% 3.7% 4.3% Egypt 7.7% Iran 6.8% 35.1% Turkey 35.0% Algeria Sudan 23.7% 26.8% Morocco 21.1% Kazakhstan 24.2%
Slide 21: Volume Breakdown by Geography
Volume Breakdown by Geography SFC total sales volume grew by around 10% during 2014 Total Volume: 3.6 mln MT Total Volume: 3.97 mln MT 2013 2014 1.5% 1.6% 0.6% 2.5% 1.6% 3.1% 0.9% KSA 0.1% 3.8% Egypt 4.3% Iran 16.1% Turkey 13.5% 42.8% 43.2% Algeria Sudan 30.6% 33.8% Morocco Kazakhstan
Slide 22: Strategic Growth Drivers
Strategic Growth Drivers 1 Diversification of 2 Leveraging the value product segments of existing brands A regional leader in basic foods across all 3 Organic growth channels 4 Selective upstream integration 5 Strategic M&A Mission is to enrich consumer cooking experience by developing ingredient so
Slide 23: Strategic Growth Drivers: Diversification of product segments
Strategic Growth Drivers 1) Diversification of product segments • Enter into adjacent and complementary new product categories • Targeting new retail and wholesale customers to drive revenue growth and enhance profit margins Consumer Cooking / Baking Experience Cooking / Baking Ingredients Ready-to-
Slide 24: Strategic Growth Drivers: Leveraging existing brands
Strategic Growth Drivers 2) Leveraging the value of existing brands • Enhance economies of scale in marketing and advertising • Facilitate establishing a foothold in new markets KSA Turkey Iran Egypt Others Afia and Ladan have been used as umbrella brands
Slide 25: Strategic Growth Drivers: Organic growth
Strategic Growth Drivers 3) Organic growth • Large population base with high disposable incomes to drive consumption of basic commodities • Exports to neighboring countries Total base for countries where Savola Foods operates Population: 380 million Population Growth (2013): 1.5% Edible Oil Co
Slide 26: Strategic Growth Drivers: Export potential
Strategic Growth Drivers Example: Iraq Oils & Fats Volume Export potential to neighbouring countries (in ‘000 Tons) +3% CAGR For example Iraq 515 530 546 Fragmented market with no sophisticated player 25% 25% 25% Ghee +3% Proximity to Jeddah plant 75% 75% 75% Oil +3% Brand awareness of Afia
Slide 27: Strategic Growth Drivers: Selective upstream integration
Strategic Growth Drivers 4) Selective upstream integration Markets Description (% seeds locally produced) Net Local farming larger than local consumption Malaysia (387%) United States (87%) Exporter Government incentives aligned to favor Indonesia (400%) Markets exports Argentina, Brazil
Slide 28: Strategic Growth Drivers: Strategic M&A
Strategic Growth Drivers 5) Strategic M&A Food Categories in GCC Total packaged food Overlapping with Other market Savola / Almarai Categories businesses Total B2C SAR 46 bln market size SAR 80 bln SAR 34 bln Number of Categories 52 28 24 Profit Pool SAR 22 bln SAR 12 bln SAR 10 bln (Gross Profit) F
Slide 29: Panda Retail Co.
Panda Retail Co. (Formerly Azizia Panda United Co.)
Slide 30: Retail Value Chain
Retail Value Chain Super Super • Selling area per store: 1,800-2,500 m2 • Sales intensity: SAR 413 /m2 /week Vendors / 50% • New Capex per store: SAR 8-12 mln Whole Sale Hyper Hyper • Selling area per store: 3,000-12,000 m2 • Sales intensity: SAR 357 /m2 /week Distribution • New Capex per store: SAR
Slide 31: Key Facts
Key Facts Customer Count Number of Stores and Selling Area CAGR 13% CAGR Selling Area 20% 650,861 m2 102Mn 155 176,000 m2 23 44 Mn 131 110 2014 54 52 60 9 2007 2013 2014 Hypermarkets Supermarkets Pandati 2007 Present in 35 cities across KSA with exceptional distribution network
Slide 32: Financial Performance
Financial Performance CAGR Revenue 11% Net income 66% 503 405 311 200 12,204 66 10,925 10,157 9,182 8,183 2010 2011 2012 2013 2014 Revenue (SAR millions) NI (SAR millions)
Slide 33: Strategic Growth Drivers
Strategic Growth Drivers 1 2 3 4 5 6 Organic Adapting to State of the Expansion of Expansion of New retail growth the demands art non-food Panda formats of Distribution lines branded customers product lines Our vision is to be the number 1 mass market retailer in the region
Slide 34: Strategic Growth Drivers: Population
Strategic Growth Drivers 2012 Population Total 28.7 mln — Total population is expected to reach 11% 9% 10% 32.8 mln by 2016 23% — 59% of total population is below 30 30% years of age, of which 50% are females 51% 19% 18% 16% 1 48% 41% — 23% more married couples (11.9 mln) 24% by 2020 Organic growth
Slide 35: Panda Market Share
Strategic Growth Drivers Panda Market Share 21.4% 22.0% 21.7% 20.3% 20.6% 18.8% 14.5% 12.4% 9.0% 8.9% 7.7% 7.8% 8.0% 1 6.8% 5.8% 4.6% Organic growth 2007 2008 2009 2010 2011 2012 2013 2014 Hyper & Super Markets Total Grocery Market Panda market share has increased over the years
Slide 36: Strategic Growth Drivers: Adapting to customer demands
Strategic Growth Drivers • Panda ranked # 1 in lowest cost of shopping by offering the best prices to customers and special 2 offers Adapting • It continues to have to the good value for money demands and lowest prices of compared to customers competitors Meeting customers’ needs is our priority
Slide 37: Strategic Growth Drivers: State of the art distribution
Strategic Growth Drivers • Distribution center (DC) in Riyadh: Largest DC in the region Built up area of around 92,500 m2 Super flat floors 3 • Setting up 2nd DC in KAEC with built up area of over 93,000 m2 State of the art • Second largest fleet size in KSA with Distribution 863 vehicles Exce
Slide 38: Strategic Growth Drivers: Expansion of non-food lines
Strategic Growth Drivers Panda has formulated a long-term strategy to increase the non-food sales 4 Expansion of non- food lines Increase in non-food sales mix will improve overall margins
Slide 39: Strategic Growth Drivers: Panda branded products
Strategic Growth Drivers Panda plans to increase the range of “Panda” branded products 5 Expansion of Panda branded product lines Increase in private label sales mix will improve overall margins
Slide 40: Strategic Growth Drivers: New retail formats
Strategic Growth Drivers Pandati Modern grocery formats underpenetrated 24% 25% 41% 36% 62% 16% 155 57% 23% 39% 6 23% 59% New 19% 36% 25% Avg. 23 15% 24% retail formats 2013 2014 UAE Italy Spain UK KSA Small Grocery Retails Hypermarkets Supermarkets Panda entered into convenient store format with th
Slide 41: Savola Investments
Z LyLoaIl ils , Dar Al Tamleek | Zé &slotSl Wajeol das Knowledge Economic City Savola Investments
Slide 42: Strategic Investments
Strategic Investments Market value* of Net profit 2014 Ownership as of Investment Savola holdings (SAR mlns) 31 Dec. 2014 (SAR mlns) Almarai 1,674 36.52% 20,433 Herfy 206 49% 2,615 Kinan 706 29.9% NA *Market value as of 28th July 2015 Investments which are complimentary to the Group’s core operating
Slide 43: Non-core Investments
Non-core Investments All numbers are in SAR millions All book values as of 31st December 116 25 1,209 136 189 105 89 549 KEC EEC Mutoun Intaj Joussour Swicorp Other Total Listed Un-listed % Ownership 11.4% 0.88% 80% 50% 15% 15% Non-core investments to be exited overtime
Slide 44: Investments Strategy
Investments Strategy Investment Executed strategy Asfan ̵ In-kind contribution to Masharef project Yasmine Riyadh & Hanaki Jeddah ̵ Sold to Kinan with realized capital gain of SAR 76 mln and SAR 77 mln in 2011 Land Medina Land ̵ Sold to KEC with realized capital gain of SAR 231 mln in 2013 Masharef
Slide 45: Financials
3 Financials
Slide 46: Revenue Growth
Revenue Growth SAR mlns CAGR 14% 27,391 25,281 26,588 25,196 21,029 17,917 13,821 10,410 2007 2008 2009 2010 2011 2012 2013 2014 Foods Retail 2013 and 2014 numbers are after Packaging Sector deconsolidation. Packaging Sector revenue in 2013 was SAR 1.12 billion Strong and consistent revenue growth
Slide 47: Income from Operations
Income from Operations SAR mlns CAGR 22% 1,931 1,815 1,573 1,355 1,082 855 933 477 496 2007 2008 2009 2010 2011 2012 2013 2014 2015 (G) Net income from operations has grown consistently
Slide 48: Return on Net Capital Employed
Return on Net Capital Employed SAR blns RONCE 12.4% 1.7 11.4% 3.3 Reallocation of capital from non- NCE Non-Core Assets 16.8 core investments NCE Core Businesses 9.9 to core businesses 2009 2014 RONCE has increased over the past few years due to focus on core businesses
Slide 49: Total Shareholders’ Return
Total Shareholders’ Return Total shareholders’ return SAR per share of around 28% 78.7 62.8 40.0 32.0 28.7 1.25 1.30 1.40 2.00 2.25 2010 2011 2012 2013 2014 Share price Dividend per share
Slide 50: Savola Group Share Price
Savola Group Share Price Share price increase of 78% 71 9,091 40 6,940 +31% Savola Tadawul All Share Index
Slide 51: Debt Position
Debt Position 3.24 2.46 2.51 2.24 2.35 2.11 2.15 0.88 0.83 0.78 0.62 0.63 0.65 0.74 0.52 0.21 2007 2008 2009 2010 2011 2012 2013 2014 Net Debt/EBITDA Debt to equity ratio Healthy balance sheet with large amount of unutilized bank lines
Slide 52: Non-managed Businesses
Non-managed Businesses SAR mlns 2014 1,063 1,009 2013 920 784 2012 853 549 2011 682 520 Managed Non Managed 2010 527 360 2009 494 458 2008 102101 2007 99 1,131 Reliance on non-managed businesses has reduced over time
Slide 53: Intangibles
4 Intangibles
Slide 54: Savola Ethics and Values
Savola Ethics and Values Balanced Way We will continue to adhere to our 1 ethics and values framework Amanah (Honesty) Shareholder We will ensure that we build a live, 2 inspiring model of our ethics and values Taqwa Birr for the future generations of Savola (Empathy) (Fairness) Community Employee M
Slide 55: Corporate Social Responsibility
Corporate Social Responsibility — Makeen center for training and employing persons with disabilities — Accessibility program - 3 companies certified by GAATES for Accessibility for PWDs — Participating in Injaz programs — Supporting various organizations 145 persons graduated from Makeen program
Slide 56: Recognition for Intangibles
Recognition for Intangibles The Savola Group: — was the only company from the Middle East and Arab countries to win the Golden Peacock Award for Excellence in Corporate Governance at the 14th London Global Convention in Oct 2014 — received top rank in Phase I of the evaluation (Disability Confidence
Slide 57: Appendix - Financial Results
Appendix - Financial Results
Slide 58: Quarterly Financials
Quarterly Financials (all figures are in SAR millions) Segment Wise Financials Q2- 2015 Q2- 2014 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 2,002 401 233 186 254 2,168 371 228 150 250 Oil-Start-up Markets* 368 57 29 21 33 401 69 32
Slide 59: Quarterly Financials
Quarterly Financials (all figures are in SAR millions) Segment Wise Financials Q1- 2015 Q1- 2014 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 1,930 331 198 119 219 1,995 342 211 172 233 Oil-Start-up Markets* 354 66 33 25 37 312 42 11
Slide 60: Annual Financials
Annual Financials (all figures are in SAR millions) Segment Wise Financials FY- 2014 FY- 2013 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 7,883 1,339 707 474 794 8,475 1,663 1,053 512 1,139 Oil-Start-up Markets* 1,458 229 97 79 116
Slide 61: Thank You
— THANK YOU