Watt's Sa · BCS:WATTS
Watt's Sa — Investor Presentation (2016)
46 slides from Watt's Sa's investor presentation, 2016
Slide 1: Corporate Overview 3rd Quarter 2016
Corporate Overview 3rd Quarter 2016
Slide 2: Content
Chapter I: The Company Watt’s Chapter II: Business Areas Content Chapter III: Strategy Chapter IV: Financial Performance 2
Slide 3: Content
Chapter I: The Company Watt’s Chapter II: Business Areas Content Chapter III: Strategy Chapter IV: Financial Performance 3
Slide 4: Chapter I: The Company
CHAPTER The Company TPs
Slide 5: The Company
The Company WATT’S • Watt’s S.A. is a publicly traded Company controlled by the Larrain family. • Founded in 1941 as a family company dedicated to manufacture homemade marmalade/jams. • During the 1970 decade Watt’s entered, through acquisitions, into the edible oils and margarine categories, and al
Slide 6: The Company
The Company WATT’S • Watt’s is among the largest Chilean food companies with relevant market shares in the milk, powdered milk, cheese, margarine, edible oils, juice, nectar, jam, canned fruit and vegetables, fresh pasta and wines. • Recently Watt’s entered the frozen vegetables market through the a
Slide 7: Watt's sales of US$590MM mainly concentrated in the Chilean market
The Company WATT’S SALES OF US$590MM ARE MAINLY CONCENTRATED IN THE CHILEAN MARKET Y SE CONCENTRAN EN EL MERCADO NACIONAL Sales Breakdown • The Company is operationally structured into the following areas: Dairy 14% 1. Dairy products 2. Edible Oils and Margarines Oil 37% 3. Fruit based products (Jam
Slide 8: Main Brands
The Company MAIN BRANDS Fruit Dairy Edible Oils Wine Foreign Pasta 8
Slide 9: History
The Company 1941 HISTORY 1875 Viña Santa Carolina is founded by Mr. Luis Pereira Cotapos. This is the oldest business within the Watt’s group. 1979 1940-1946 Watt’s is born as a marmalade and jams manufacturer (Watt’s family). 1970-1979 Watt’s is acquired by the Larrain family. Santa Carolina vineya
Slide 10: History (2000-2011)
2004 The Company 2000 - 2005 Chef, Cristal and Mazola brands are acquired from Unilever. A new dairy plant is built in Lonquén – Santiago, close to the largest consumption area in Chile. Investment grade upgrade from A- to A. 2006 2006 - 2008 Acquisition of Astra and Palmin brands from Unilever. A j
Slide 11: History (2012-2016)
The Company 2012 2011 2012 Watt’s acquires 100% of the shares of the Las Parcelas de Valdivia Company, a leading high quality cheese producer, consolidating a leadership position in this category. 2013 2013 A new modern Distribution Center is built and put in service. 2014 Acquisition of Frutos del
Slide 12: Corporate Societary Structure
The Company CORPORATE SOCIETARY STRUCTURE 50% Promarca S.A. 99,9% Watt’s Paraguay S.A. Watt’s S.A. 37,68% Laive S.A. 100% Viña Santa Carolina S.A. 100% Frutos del Maipo S.A. 12
Slide 13: Ownership Structure and Board
The Company OWNERSHIP STRUCTURE AND BOARD President Major Shareholders Fernando Larrain Peña 12,0% 1,7% 2,2% 3,8% Vicepresident 12,6% 50,2% Aníbal Larrain Cruzat 17,5% Directors Carlos Felipe Fernando Leonidas Pablo Pablo Canio Antonio Díaz Soza Larrain Vial Echeverría Turner Larrain Family Corbo Li
Slide 14: Content
Chapter I: The Company Watt’s Chapter II: Business Areas Content Chapter III: Estrategy Chapter IV: Financial Performance 14
Slide 15: Chapter II: Business Areas
CHAPTER II Business Areas
Slide 16: Dairy
Business Areas Dairy Watt’s dairy businesses are composed of: milk, powdered milk, cheese, butter, yogurt, fudge and cream. Watt’s competes in these categories with the following brands: Business Areas Powdered Milk Dairy Milk Cheese Yogurt Others 16
Slide 17: Watt's Position in the Dairy Market
Business Areas WATT’S POSITION IN THE DAIRY MARKET Market Shares – Milk Market Shares – Powdered Milk (Value) (Value) Soprole 25% Colún Nestlé Watt's 17% Watt's 23% Surlat 31% Colún 71% Nestlé 6% P. Labels 3% P. Labels 5% 5% 2% 11% Others Others Market Shares – Cheese Market Shares – Yogurt (Value)
Slide 18: Dairy Industry Facts - Chile
Business Areas DAIRY INDUSTRY FACTS - CHILE Powdered • Market Sizes Milk Cheese Yogurt Milk US$ 375 MM US$ 405 MM US$ 387 MM US$ 169 MM Total: Watt’s: • Milk Reception Chile* (2015) 2.029 250 Million Lts. Million Lts. • Big Industry players with long history and prestige. • High degree of innovation
Slide 19: Edible Oils & Margarines
Business Areas EDIBLE OILS & MARGARINES Oils Business Areas Edible Oils Margarine Mantecas Fresh Pasta 19
Slide 20: Watt's Position in the Edible Oils Markets
Business Areas WATT’S POSITION IN THE EDIBLE OILS MARKETS Market Share – Edible Oils Market Shares – Margarines (Value) (Value) 13% 22% 25% 2% 3% 37% 6% 21% 47% 24% Watt's Watt's TMLUC (Miraflores) Unilever (Dorina y Bonella) P. Labels Soprole Nestlé Others P. Labels Source: Nielsen, 2016 / Watt’s S
Slide 21: Oil Industry Facts - Chile
Business Areas OIL INDUSTRY FACTS - CHILE • Market Sizes Oil Margarine US$ 283 MM US$ 81 MM • Entry barriers: Production infrastructure, technical know-how, established brands, distribution network, scale economics in production and purchase of raw materials. • Hydrogenated products are of high degr
Slide 22: Fruit Based Products
Business Areas FRUIT BASED PRODUCTS The Fruit Based Products category is composed of Juice & Nectar, Marmalade and Jams, Canned Fruit & Vegetables and Tomato based products. Business Areas Juice & Nectars Fruit Based Products Marmalade Canned Fruit & Vegetables Tomato based Products 22
Slide 23: Watt's Position in Fruit Based Products
Business Areas WATT’S POSITION IN FRUIT BASED PRODUCTS Market Shares – Juice & Nectar(*) Market Shares – Marmalade (Value) (Value) 14% 8% 1% 13% 4% 6% 46% 8% 61% 10% 29% Watt's Andina Watt's TMLUC (Yuz) Eckart Soprole Unilever (Malloa) P. Labels P. Labels Others Others (*) Shares include Promarca So
Slide 24: Watt's Position in Fruit Based Products
Business Areas WATT’S POSITION IN FRUIT BASED PRODUCTS Shares – Canned Fruit Shares – Canned Vegetables (Value) (Value) 25% 14% 17% 29% 14% 20% 7% 34% 14% 20% 6% Pentzke (Dos Caballos) Watt's Watt's Agrofoods (Malloa) ICB (Esmeralda) Aconcagua Demaria (Deyco) P. Labels P. Labels Others Others Source
Slide 25: Fruit Industry Facts - Chile
Business Areas FRUIT INDUSTRY FACTS - CHILE Juice & • Market Sizes Nectar Marmalade Canned US$ 61 MM US$ 133 MM US$ 430 MM • Industry with growth potential: Trends towards the healthy. Chile has comparative advantages in the fruit production. • Raw Materials: Most are bought in Chile. Contracts with
Slide 26: Frozen Vegetables
Business Areas FROZEN VEGETABLES • In November 2014, Watt’s enters the frozen vegetables category through the acquisition of Frutos del Maipo. • FDM sales are above US$70 million. Business Areas • Frutos del Maipo is the second most important player in the category. Frozen Vegetables • Market Size:
Slide 27: Watt's Position in Frozen Vegetables
Business Areas WATT’S POSITION IN FROZEN VEGETABLES Market Share – Frozen Vegetables (Value) 28% 37% 2% 33% Alifrut Watt's (Frutos del Maipo) P. Labels Otros Source: Nielsen, 2016 / Watt’s S.A. Data: RY to Jun-16 27
Slide 28: Wine
Business Areas WINE • Santa Carolina sales in 2015 were US$72MM, considering both the domestic and export markets. • The Company owns 843 hectares of vineyards in the main wine valleys in Chile. • Additional +1.000 Hectares of vineyards are Business Areas contracted in the central zone of Chile. Ano
Slide 29: Content
Chapter I: The Company Watt’s Chapter II: Business Areas Content Chapter III: Strategy Chapter IV: Financial Performance 29
Slide 30: Chapter III: Strategy
= CHAPTER III Strategy
Slide 31: Strategy
Strategy STRATEGY Key Strategies Strong Brands with Clear Positioning Leadership position in the markets we compete Revenue Diversification Watt’s Consistency in results and cash flows Strategy Solid distribution channels Permanent Product Innovation 31
Slide 32: Leading & Well Positioned Brands
Strategy LEADING & WELL POSITIONED BRANDS MARKET SIZE MARKET SHARE CATEGORIES RANKING WATT’S BRANDS (US$ MM) (VALUE) JUICE & NECTARS 430 46% 1º EDIBLE OILS 283 25% 1º MARGARINES 81 37% 1º MARMALADE 61 61% 1º CANNED VEGETABLES 65 29% 1º POWDERED MILK 169 23% 2º CANNED FRUIT 68 14% 2º FROZEN VEGETABLE
Slide 33: Robust Operations and Supply Chain
Strategy ROBUST OPERATIONS AND SUPPLY CHAIN WATT’S HAS A ROBUST CAPACITY TO DELIVER PRODUCTS TO ITS CUSTOMERS Watt’s serves directly 14.500 customers, and is able to get to 40.000 customers through distributors. Watt´s is present in supermarkets, distributors, wholesalers, food service, industrial a
Slide 34: Production, Sales and Distribution
Strategy PRODUCTION, SALES AND DISTRIBUTION Sales by Channel 15% Sales Offices 23% Distribution Centers 62% Manufacturing Plants Supermarkets Traditional Industries Source: Watt’s S.A. 34
Slide 35: Presence in Perú - Laive
Strategy PRESENCE IN PERÚ - LAIVE • Laive is one of the main food companies in Perú. • Revenues: US$ 141 MM • Laive is a traditional Peruvian company founded in 1910. • Watt’s, equal to its partners (the Palacios Moreyra family), holds a 37.68% of the stock of Laive. Both control the Company through
Slide 36: Innovation - A Key Lever for Growth
Strategy INNOVATION – A KEY LEVER FOR GROWTH Watt’s launches one new innovation initiative per week 36
Slide 37: Content
Chapter I: The Company Watt’s Chapter II: Business Areas Content Chapter III: Estrategy Chapter IV: Financial Performance 37
Slide 38: Chapter IV: Financial Performance
CHAPTER IV Financial Performance
Slide 39: Revenues and Earnings
Financial Performance REVENUES AND EARNINGS Revenues Earnings 594 590 40 600 35,2 35 32,8 550 531 31,7 488 481 30 28 500 466 24,2 25 US$ Million US$ Million 450 20,5 400 20 350 15 300 10 250 5 200 0 2011 2012 2013 2014 2015 RY 2011 2012 2013 2014 2015 RY • Revenues totaled US$594 million for 2015, r
Slide 40: Revenues and Earnings (Accumulated)
Financial Performance REVENUES AND EARNINGS Accumulated Income Accumulated Earnings 600 35 30 500 438 433 25,9 25 23,5 US$ Million US$ Million 400 20 300 15 200 10 100 5 0 0 sep-15 sep-16 sep-15 sep-16 Source: Watt’s S.A., ER 1US$=CH$ 650 40
Slide 41: Operating Income and EBITDA
Financial Performance OPERATING INCOME AND EBITDA Operating Income EBITDA 70 10,2 90 13,1 9,6 9,6 12,2 12,3 12,2 60,5 9,1 80 77,7 60 71,7 51,1 53,9 70 9,9 10,1 65,6 7,5 7,7 50 46,3 58,8 60 US$ Million US$ Million 37,7 49,4 40 35 50 46 30 40 30 20 20 10 10 0 0 2011 2012 2013 2014 2015 RY 2011 2012 20
Slide 42: Operating Income and EBITDA (Accumulated)
Financial Performance OPERATING INCOME AND EBITDA Accumulated Operating Income Accumulated EBITDA 60 10,3 80 13,2 14,5 8,8 70 12 50 44,9 57,8 60 40 38,3 51,8 9,5 US$ Million US$ Million 50 30 40 30 20 4,5 20 10 10 0 sep-15 sep-16 0 -0,5 sep-15 sep-16 Operating Income % EBITDA % Source: Watt’s S.A.,
Slide 43: Ratios
Financial Performance RATIOS Net Financial Debt / EBITDA* Coverage 3,5 14 3,1 12,3 12,6 3 2,8 2,8 12 10,4 2,5 2,5 2,2 2,3 10 9,2 8 2 8 times times 6 1,5 6 1 4 0,5 2 0 0 2011 2012 2013 2014 2015 RY 2011 2012 2013 2014 2015 RY EBITDA / Interest Covenant > 2,8 • The Company’s net financial debt as of S
Slide 44: Liabilities, Ratios
Financial Performance LIABILITIES, RATIOS Leverage Maturity profile of debt 2 1,4 1,4 1,4 80.966 1,5 1,3 1,3 1,3 $ Million times 1 48.404 0,5 3.877 3.317 0 2011 2012 2013 2014 2015 RY < 1 Year 1-3 years 3-5 years > 5 years Leverage Covenant<1,77 Banks Bonds Structure by type of debt Structure by cur
Slide 45: Laive Results
Financial Performance LAIVE RESULTS Revenues Net Financial Debt 180 160 149 150 20 18,5 143 140 126 15,3 14,8 14,1 14,2 15 US$ Million US$ Million 120 108 100 80 10 60 40 5 20 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 EBITDA Earnings 5 12 10,8 11,3 4,3 9,5 9,9 4 3,8 10 3,6 US$ Million US
Slide 46: Corporate Overview Watt's 2016
Corporate Overview Watt’s 2016