Britvic — FY2006 Earnings Presentation
34 slides from Britvic's earnings presentation, Nov 30, 2006
Slide 1: Preliminary Results Presentation
Preliminary Results Presentation 30 November 2006
Slide 2: Gerald Corbett, Chairman
Gerald Corbett Chairman \I BRITVIC ple
Slide 3: John Gibney, Finance Director
John Gibney Finance Director
Slide 4: Financial Headlines
Financial Headlines FY 06 FY 05 % Change £’m £’m Branded Revenue 677.7 695.8 (2.6) EBIT 73.7 73.3 0.5 EBIT Margin 10.9% 10.5% 0.4%pts Profit after Tax 39.6 39.7 (0.3) Basic earnings per share 18.4 18.5 (0.5) Free cash flow 48.9 (10.3) Return on Invested Capital 17.0% 16.8% Full year Dividend per sha
Slide 5: Summary FY06 – Operating Profit
Summary FY 06 – Operating Profit FY 06 FY 05 % Change £’m £’m Branded Volume (million litres) 1330.6 1375.5 (3.3) Average Realised Price (ARP) per litre 50.9 50.6 0.6 Branded Revenue 677.7 695.8 (2.6) Brand Contribution 289.1 299.0 (3.3) Non brand A&P (6.1) (6.6) 7.6 Fixed Supply Chain (68.0) (66.2)
Slide 6: Performance H2 on H1
Performance H2 on H1 H1 06 H2 06 Movement on H1 05 on H2 05 % % % pts Volume Carbonates (7.2) (4.2) +3.0 Stills 0.3 3.8 +3.5 Total (4.9) (1.7) +3.2 Revenue Carbonates (9.0) (4.7) +4.3 Stills (1.0) 5.6 +6.6 Total (5.3) - +5.3 Brand Contribution Margin (%pt movement) Carbonates (3.0) 0.8 +3.8 Stills (
Slide 7: Carbonates
Carbonates FY 06 FY 05 % Change £’m £’m Volume (million litres) 848.3 899.6 (5.7) ARP per litre 39.2p 39.7p (1.3) Revenue 332.5 356.9 (6.8) Brand Contribution 130.1 143.3 (9.2) Brand Contribution Margin 39.1% 40.2% (1.1)% pts Direct product costs increased by 2.1%
Slide 8: Stills
Stills FY 06 FY 05 % Change £’m £’m Volume (million litres) 446.5 437.3 2.1 ARP per litre 72.1p 71.9 0.3 Revenue 321.7 314.3 2.4 Brand Contribution 152.0 147.5 3.1 Brand Contribution Margin 47.2% 46.9% 0.3% pts Direct product costs increased by 0.9%
Slide 9: International
International FY 06 FY 05 % Change £’m £’m Volume (million litres) 35.8 38.6 (7.3) ARP per litre 65.6p 63.9 2.7 Revenue 23.5 24.7 (4.9) Brand Contribution 7.0 8.2 (14.6) Brand Contribution Margin 29.8% 33.2% (3.4)% pts Direct product costs decreased by 3.2%
Slide 10: Overheads and other costs
Overheads and other costs FY 06 FY 05 % Change £’m £’m Non Brand A&P (6.1) (6.6) 7.6 Total A&P spend (44.6) (48.9) 8.7 A&P as % Net Revenue 6.6% 7.0% Fixed Supply Chain (68.0) (66.2) (2.7) Selling Costs (86.0) (88.8) 3.2 Overheads & Other (55.3) (64.1) 13.7 Total (215.4) (225.7) 4.6
Slide 11: EBIT to Earnings
EBIT to Earnings FY 06 FY 05 % Change £’m £’m EBIT 73.7 73.3 0.5 Interest (17.8) (16.5) (7.9) Profit before tax 55.9 56.8 (1.6) Tax (16.3) (17.1) 4.7 Tax rate 29.2% 30.1% Profit after tax 39.6 39.7 (0.3) Note: all numbers exclude the effect of the discontinued Private Label Water business and are be
Slide 12: Exceptional Items
Exceptional Items FY 06 £’m Cash items IPO Costs 5.5 Restructuring costs 7.0 12.5 Share items Transitional Share Awards 3.0 All employee share offer* 2.8 18.3 Non cash items Wind up of IHG share options 0.8 Total exceptional items 19.1 Total exceptional items after tax 15.4 *£300k purchased rather t
Slide 13: Improving Cash Position and Reducing Working Capital
Improving Cash Position and Reducing Working Capital FY 06 FY 05 % Change £’m £’m Operating Profit pre exceptionals 73.7 73.3 0.5 Depreciation 47.3 47.0 0.7 EBITDA 121.0 120.3 0.6 Working Capital 12.3 (16.2) Capital Expenditure (33.0) (51.7) 36.1 Pension contribution (30.0) (30.0) – Other (21.3) (32
Slide 14: Dividends
Dividends • Interim Dividend of 3 pence per share • Final Dividend of 7 pence per share payable on 16th February 2007 • Total Dividend of 10 pence per share
Slide 15: Guidance
Guidance • Hot summer benefit in FY06 of £2.5m at an EBIT level • PVO £2m further saving in 2007 • Brand contribution reflected in FY06 numbers expected to be sustainable • On track to deliver £18m of planned cost savings by 2008: • 2007 incremental savings of £4m identified • 2008 incremental savin
Slide 16: Summary
Summary • Improved H2 revenue and profit performance on H1 despite continued challenging market assisted by benefit of hot July • Strong brand contribution margin - improved in H2 • EBIT margin growth through strong management action: • Continued focus on ARP • Further cost reductions delivered • St
Slide 17: Paul Moody, Chief Executive
Paul Moody Chief Executive \I BRITVIC ple
Slide 18: Agenda
Agenda • Market • Strategy • Management action: • Profitable revenue growth • Innovation • Driving efficiency • Current trading
Slide 19: Soft Drinks Market Volume
Soft Drinks Market Volume World Cup Hot July 220,000 2003/04 2004/05 2005/06 200,000 Volume Thousand Litres 180,000 160,000 140,000 120,000 100,000 80,000 05 05 05 05 06 06 06 06 06 06 06 06 06 06 06 06 06 06 0. 1. 2. 1. 1. 2. 3. 3. 4. 5. 5. 6. 7. 7. 8. 9. 0. 0. .1 .1 .1 .0 .0 .0 .0 .0 .0 .0 .0 .0 .
Slide 20: Carbonates Market Volume
Volume Thousand Litres W E. 09 W .10 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 E . 30 05 W .10 E . 20 05 W .1 E 1. 11 05 W .12 E . 01 05 W .01 E . product launches 22 06 W .01 E . 12 06 W .02 E . 05 06 W .03 E . 26 06 W .03 Carbonates Market Volume E . 16 06 Source: ACNielsen Scantra
Slide 21: Stills Market Volume
Volume Thousand Litres W E. 09 W .10 40,000 60,000 80,000 100,000 120,000 E . 30 05 W .1 0 E . 20 05 W .1 1 E . 11 05 W .1 E 2. 01 05 W .0 1 E . 22 06 W .01 E . Stills Market Volume 12 06 W .02 E . 05 06 W .0 3 E . 26 06 W .0 3 E . 16 06 W .0 Source: ACNielsen Scantrack Sept 2006: Take Home E 4. 07
Slide 22: Relative Size of Categories and Growth
Relative Size of Categories and Growth Cola +0.9% -3.8% -1.4% Fruit Carbs -0.7% -20.7% -14.4% Lemonade -0.5% -1.0% -1.0% Diet/ Low Cal Carbs Non Fruit Carbs +5.1% -2.8% -1.2% Regular/ Full Sugar Functional +18.2% Water +9.0% Pure Juice +4.2% Squash +10.2% +1.2% +6.9% Juice Drinks -7.5% +13.5% +7.7%
Slide 23: Our strategy
Our strategy Growth Productivity Enabling - Aggressively grow stills - A focus on efficiency, - Delivering great - Drive profitable revenue driving margins and leadership, driving a growth in core brands optimising working high performance - Continued success from capital culture and growing innovat
Slide 24: Driving Profitable Revenue: Pepsi
Driving Profitable Revenue: Pepsi • Heavy weight advertising campaign to continue to drive the Pepsi Max share of ‘better for you’ carbonates • Utilising all media elements • Significant investment in communicating ‘Max your life’ • Campaign has delivered a strong share performance with Pepsi share
Slide 25: Driving Profitable Revenue: A Focus on Robinsons
Driving Profitable Revenue: A Focus on Robinsons • Category importance growing • Largest soft drinks category as drunk • High price per litre • Consumers switching in from Carbonates • Improved range and distribution • Significant consumer promotions: • Pre-Christmas Narnia-related activity • Most s
Slide 26: Driving Profitable Revenue: J20/ Pressed & Squeezed
Driving Profitable Revenue: J20/ Pressed & Squeezed • J20 • Continued growth in brand performance / share of adult category • Global supply issue in Passion Fruit now resolved • Growth in space in major grocers • Introduction of Ltd Edition Orange & Pomegranate in October • New TV advertising to bui
Slide 27: Driving Profitable Revenue: Fruit Shoot
Driving Profitable Revenue: Fruit Shoot • Introduction of Fruit Shoot ‘natural’ • No artificial flavours or colours • 15% reduction in sugar • Removed sodium benzoate • Supported by Press campaign to mums: • Two versions rotating from Oct 06 to Jan 07 • Total campaigning will reach 73% of all househ
Slide 28: Driving Profitable Revenue: Building a strong presence in water
Driving Profitable Revenue: Building a strong presence in water • Fruit Shoot H20 • No 1 in kids water market 8 weeks from launch • 90% of volume incremental to Fruit Shoot • 79% incremental to the Kids Water category • Planned growth in distribution to drive weight of purchase • New 8 pack from Apr
Slide 29: Driving profitable revenue: Innovation
Driving profitable revenue: Innovation • 2007 innovation programme • 1 to 2 major launches • 2 to 3 supporting launches • All innovation centralised around the four themes of: • Health and well-being • Naturalness • Occasionality • Indulgence • Really Wild • 6 Natural juice drinks with spring water
Slide 30: Driving profitable revenue: International
Driving profitable revenue: International • Squash in Scandinavia • Successful advertising campaign • First TV campaign was seen by 72% of Danish population • Advert was voted 6th best advert in a recent consumer poll by the largest commercial station in Denmark • Strong share performance – category
Slide 31: Efficiency: Business Transformation Programme
Efficiency: Business Transformation Programme • A huge programme delivering efficency and effectiveness improvements • £11m of sustainable cost savings in FY06: • Headcount reduction across the business • Total centralisation and automation of the procurement processes onto SAP • Reduction in out-st
Slide 32: Efficiency: Product Value Optimisation (PVO)
Efficiency: Product Value Optimisation (PVO) • £2m saving delivered in FY06: • Vertical integration savings – e.g. Rugby bottle blowing • Productivity savings – e.g. Sugar reduction • £2m additional savings identified for FY07: • Further bottle blowing • In house large pack PET squash production at
Slide 33: Summary
Summary • Carbonates show continued volatility • Stills are growing at a very attractive rate • A real focus on efficiency • ARP • Margin • Costs • All innovation focused in the growth areas of the market • Business started well in the new financial year Well positioned in this growth market
Slide 34: Questions & Answers
Questions & Answers \I BRITVIC