East African Breweries Plc · NSEKE:EABL
East African Breweries — FY2018 Earnings Presentation
36 slides from East African Breweries's earnings presentation, 2018
Slide 1: EABL Full Year Results Presentation
EABLAFRICAN EAST 2018 BREWERIES LTD FULL YEAR RESULTS PRESENTATION FULL-YEAR RESULTS 1
Slide 2: Full Year Results Briefing
FULL YEAR RESULTS F18 Commercial Review Andrew Cowan BRIEFING F18 Financial Performance Gyuri Geiszl F19 Priorities Andrew Cowan Q&A 2
Slide 3: F18 Full Year Review
F18 FULL YEAR REVIEW Andrew Cowan Group Managing Director
Slide 4: We are clear on our ambition
We are clear on To create the best our ambition performing, most trusted and respected consumer products company in Africa Strengthen and accelerate our premium core brands Win in reserve in every market Innovate at scale to meet new consumer needs Build and then constantly extend our advantage
Slide 5: Growth driven by bottled beer and mainstream spirits
GROWTH DRIVEN BY BOTTLED BEER AND MAINSTREAM SPIRITS Volume +7% Net Sales +5% Gross Profit +4% Profit after tax -15% Operating Cash Conversion 117% Total Dividend KES 7.50/share 5
Slide 6: Broad-based growth across our markets
BROAD-BASED GROWTH ACROSS OUR MARKETS Contribution to Net Sales Key Brands Overall EABL growth (KES) KENYA 73% +1% UGANDA 16% +4% TANZANIA 11% +41% Total EABL 100% +5% 6
Slide 7: Improvement in all categories in H2
IMPROVEMENT IN ALL CATEGORIES IN H2 H1 H2 FY 18% 12% 8% 7% 9% 8% 4% 0% 0% -3% -13% -22% Spirits Bottled beer Senator Total beer 7
Slide 8: Innovation NSV contribution increased to 22%
INNOVATION NSV CONTRIBUTION INCREASED TO 22% KENYA UGANDA TANZANIA +21% +17% +38% 8
Slide 9: Kenya growth of bottled beer and spirits
Kenya GROWTH OF BOTTLED BEER AND SPIRITS +1%* MITIGATING SENATOR DECLINE Bottled beer turnaround, sales Mainstream spirits growing +5% growing +22% Scotch grew +4% +21% growth in innovation Senator decline Total spirits in driven by +7% growth uncertainty and constrained by plant shutdown in uncontr
Slide 10: Uganda premium beer and mainstream spirits drive growth
Uganda PREMIUM BEER AND MAINSTREAM +4%* SPIRITS DRIVE GROWTH Tusker Lite and Guinness Innovation delivering +11% driven by Uganda growth in Premium Waragi Coconut beer RTD category in +6% growth Strong Performance in Mainstream Spirits * Net sales growth in local currency 10
Slide 11: Tanzania Serengeti family drives growth
Tanzania SERENGETI FAMILY DRIVES GROWTH +41%* Successful Premium launch of Serengeti Serengeti Lite Lager volumes up Continued RTD growth at +8% Robust Guinness growth Spirits in growth at +5% driven launch of Smirnoff X1 11 * Net sales growth in local currency
Slide 12: KES 7.8bn Kisumu investment
KES 7.8bn Kisumu investment Capital Investments in the last 5 years to meet increasing Demand CAPEX Disposals 13.0 6.8 5.6 4.9 5.0 3.7 2.5 0.2 0.3 0.9 FY14 FY15 FY16 FY17 FY18
Slide 13: Excellence awards
Excellence awards Gold winner -Employer of the year in Uganda – Federation of Uganda Employers KBL Supply Team (Tusker Brewery and UDV) – 9 Gold Awards in the Monde Selection Quality award – 10 years back to back quality trophy Emerged top Uganda CFO of the year in the 2017 ACCA and Deloitte
Slide 14: Social Responsibility
Social Responsibility Ongoing Stakeholder Engagement: including national and county governments, farmers, etc. yielded great impact for residents in Kisumu and its environment Commercially Driven Programmes: commercial agenda through recruitment of retailers in western region Responsible Drink
Slide 15: Social Responsibility
Social Responsibility Clean up exercise in Kampala Uganda to Responsible drinking messaging in partnership EABL Group MD ploughing a farm in Kisumu commemorate World Environment Day with Taifa Stars in Tanzania Commissioning of a Borehole in Tanzania “Red Card” responsible drinking campaign in Ugand
Slide 16: Stakeholder Relationships
Stakeholder Relationships Uganda Minister for Environment during a tree planting activity UK High Commissioner to Kenya visiting the Kisumu Uganda Minister for Trade visiting the IDU Plant in Uganda during the World Water Day celebrations Brewery Former CS for Industrialization visiting the Kisumu B
Slide 17: Thank You
Thank You Please hold the questions to the end 17
Slide 18: F18 Financial Performance
F18 FINANCIAL PERFORMANCE Gyuri Geiszl Group Finance and Strategy Director
Slide 19: NSV growth of +5% driven by improved second half performance
NSV GROWTH OF +5% DRIVEN BY IMPROVED PERFORMANCE IN THE SECOND HALF Improved volume FY F18 FY F17 performance in H2 (+10% vs LY vs +4% in H1) across all KES bn KES bn categories Gearing also improved from Volume (mEU) 12.5 11.7 +7% -4ppt in H1 to flat in H2: • Improvement of Senator keg resulted in
Slide 20: Broad based growth weakened by Senator keg
BROAD BASED GROWTH WEAKENED BY SENATOR KEG Source of net sales growth by segment H1 +5% -0% -22% -0% +28% -0% H2 +5% +15% -3% +9% +56% +10% FY +5% +7% -13% +4% +41% +5% 2.1 1.0 1.7 0.5 1.4 73.5 70.2 2017 Bottled Spirits Senator Uganda Tanzania 2018 beer Kenya 20
Slide 21: Bottled beer growing +9%
BOTTLED BEER GROWING +9% Source of beer net sales growth by segment H1 -0% +7% +13% -22% -0% H2 +9% +23% -11% -3% +8% FY +6% +17% +0% -13% +4% 0.1 1.7 2.5 0.9 53.8 51.8 2017 Premium Mainstream Other value Senator 2018 Bottled beer keg 21
Slide 22: Mainstream drives +7% spirits growth
MAINSTREAM DRIVES +7% SPIRITS GROWTH Source of spirits net sales growth by segment H1 +14% +4% -21% -11% -18% +0% H2 +33% +2% +2% +7% -1% +18% FY +23% +3% -11% -3% -10% +8% 0.1 0.0 0.1 0.3 1.9 19.5 18.0 2017 Mainstream Value Reserve Premium RTDs 2018 22
Slide 23: Cost of sales – volume growth impact offset by productivity
COST OF SALES – VOLUME GROWTH IMPACT OFFSET BY PRODUCTIVITY FY F18 FY F17 vs LY KES bn KES bn COGS/unit improved by Volume (mEU) 12.5 11.7 +7% +2% driven by operational efficiencies Net sales 73.4 70.2 +5% Improvement in H1 was helped was also helped by mix (recovery of Senator Cost of sales (41.1)
Slide 24: Continued step up in A&P investment
CONTINUED STEP UP IN A&P INVESTMENT FY F18 FY F17 vs LY KES bn KES bn Gross profit 32.4 31.1 +4% Selling & distribution (6.4) (5.4) -19% Selling and distribution costs up +19% to rejuvenate bottled Administrative expenses (8.5) (8.2) -3% beer and drive innovation 17.4 17.5 -0% Gain on land sales 0.7
Slide 25: Funding of Kisumu brewery increases net borrowings
FUNDING OF KISUMU BREWERY INCREASES NET BORROWINGS FY F18 FY F17 vs LY KES bn KES bn Higher CAPEX spend driving Net borrowings (27.5) (24.4) -13% increased net borrowings Effective interest rate has reduced, also helped by Finance costs, net (3.4) (3.2) -6% capitalisation of Kisumu funding costs Net
Slide 26: Profit after tax down -15%
PROFIT AFTER TAX DOWN -15% FY F18 FY F17 vs LY KES bn KES bn Effective tax rate in line with last year but above headline Operating profit 15.1 16.5 -8% rate due to non-deductable interest Finance costs, net (3.4) (3.2) -6% Profit after tax down -15% Profit before tax 11.7 13.3 -12% due to tax provi
Slide 27: Strong cash delivery with 117% OCC
STRONG CASH DELIVERY WITH 117% OCC F18 F17 KES KES vs LY % ’bn’ ’bn’ Operating profit 15.1 16.5 (1.4) -8% Improved planning process and Depreciation and forecasting accuracy lowers amortization 4.0 3.8 0.3 +7% level of inventory (Gain)/loss on asset sales (0.7) 0.2 (0.9) Working capital movements 3.
Slide 28: We continue to invest in our future growth
WE CONTINUE TO INVEST IN OUR FUTURE GROWTH CAPEX Total investment of KES 13.0bn (Kisumu brewery 7.8bn, DPVs 1.0bn, spirits line 0.6bn, returnables 1.4m, keg rackers 0.3m, coolers 0.3m, other 1.6bn (F17: KES 5.7bn) Capacity expansion • Returnable bottles, kegs and coolers to support volume growth acr
Slide 29: Dividend unchanged
DIVIDEND UNCHANGED F18 F17 Dividends KES/share KES/share Interim 2.0 2.0 Final 5.5 5.5 Total 7.5 7.5 29
Slide 30: Thank You
Thank You Please hold the questions to the end 30
Slide 31: F19 Priorities
F19 PRIORITIES EAST AFRICAN Andrew CowanBREWERIES LTD FULL YEAR RESULTS PRESENTATION Group Managing Director 31
Slide 32: Priorities going forward
Priorities going forward Opportunities for further growth Commercialize the Kisumu brewery Drive margin enhancement Srengthen re-recruitment of bottled beer consumers Win in premium leading with Scotch and vodka Go bolder and faster with productivity initiatives Sustain spirits growth mo
Slide 33: Q & A Session
. eabl Q & A Session
Slide 34: Appendix
. eabl APPENDIX
Slide 35: Strong trajectory in second half
STRONG TRAJECTORY IN SECOND HALF F18 H1 F17 H1 F18 H2 F17 H2 vs LY vs LY KES bn KES bn KES bn KES bn Volume (mEU) 6.3 6.1 +4% 6.2 5.7 +10% Gross sales 68.3 64.0 +7% 66.7 60.0 +11% Excise duties (31.5) (27,1) -16% (30.1) (26.7) -12% Net sales 36.8 36.9 -0% 36.6 33.3 +10% Cost of sales (20.8) (20.3) -
Slide 36: Cautionary Statement concerning forward-looking statements
Cautionary Statement concerning forward-looking statements: This document contains ‘forward-looking’ statements. These statements can be identified by the fact that they do not relate only to historical or current facts. In particular, forward-looking statements include all statements that express f
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