Savola Group · TADAWUL:2050
Savola — Investor Presentation (March 2014)
65 slides from Savola's investor presentation, March 2014
Slide 1: Focusing, Delivering
FOCUSING 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 • Started sugar and oil commercial • Acquired Pasta business in Egypt, • Issued Sukuk worth SAR 1.5 bln, first production in Egypt and Algeria, resp. the largest acquisition made by tranche of SAR 5 bln program • Acquired oil business in Turkey Savola Foods • Purchas
Slide 5: History – Key Development Stages
History – Key Development Stages Today Savola Group is one of the top Food, Retail and Plastics Packaging player in the MENA region with leading brands
Slide 6: Key Facts
Key Facts Around 23,800 Net Sales of SAR Employees 26.4 bln in 2013 Countries of Market Operations: 8+ capitalization of SAR 37.5 bln (as of 1st May 2014)
Slide 7: Our Businesses
Our Businesses Foods Retail (Edible Oils, Sugar, Pasta) (Hypermarkets & Supermarkets) Revenue SAR 14.6 bln Revenue SAR 10.9 bln Investments Plastics (Strategic and Non-core) (Rigid & Flexible) Value of over SAR 18 bln Revenue SAR 1.1 bln
Slide 8: Our Businesses
Our Businesses Revenue by Sector Total: SAR 27 bln Total: SAR 26 bln 2012 2013 Foods 37.1% Plastics 41.4% Retail 55.2% 59.8% 3.8% 4.2%
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
Savola Foods
Slide 13: Oil Value Chain
Oil Value Chain Raw materials Offering Palm oil Refining Packaging B2B/ Export Corn oil Sunflower oil Soya oil B2C Brands and market positions KSA, GCC & Afia, Al Arabi, Shams, Olite, Rawabi, Afia, Ganna, Slite, #1 Egypt #1 Yemen Nakheel, Dalal Helwa Iran #1 Ladan, Aftab, Bahar Turkey #1 Yudum, Sirm
Slide 14: Sugar Value Chain
Sugar Value Chain Raw materials Offering Raw Cane 91% Refining Sugar B2B/ Export 9% Beet B2C Beet sugar plant is Brands and market positions completed and started operations in KSA, GCC & Al Osra, Ziadah, Safaa, Nehar, Halla, Yemen #1 Sweeva Q1 2014 Egypt NA Al Osra
Slide 15: Pasta Value Chain
Pasta Value Chain Raw materials Offering Processing Unbranded 100% Wheat Branded Brands and market positions Egypt #1 Maleka, Italiano
Slide 16: Financial Performance
Financial Performance CAGR Revenue 12% Net income 12% 626 631 489 399 234 16,389 15,224 14,552 12,026 9,337 2009 2010 2011 2012 2013 Revenue (SAR millions) NI (SAR millions)
Slide 17: Revenue Breakdown
Revenue Breakdown SFC Revenue Breakdown by Geography, 2013 (Total: SAR 14.6 bln) 2.2% 0.9% 1.9% 4.3% KSA Egypt 7.7% Iran 35.1% Turkey Algeria 26.8% Sudan Morocco 21.1% Kazakhstan
Slide 18: Volume Breakdown
Volume Breakdown SFC Total Sales Volume by Geography, 2013 (Total: 3.6 mln MT) 0.9% 1.6% 0.6% 3.1% KSA 4.3% Egypt Iran 16.1% 42.8% Turkey Algeria Sudan Morocco 30.6% Kazakhstan
Slide 19: 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 20: 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 21: 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 22: 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 Food operates Population: 397 million Population Growth (2013): 1.5% Edible Oil Con
Slide 23: Strategic Growth Drivers
Strategic Growth Drivers 1 2 3 KSA Egypt Turkey Population: 30.0 mln Population: 86.1 mln Population: 76.7 mln Population Growth (2013): 1.9% Population Growth (2013): 1.6% Population Growth (2013): 1.2% GDP Growth: 3.6% GDP Growth: 1.8% GDP Growth: 3.8% Edible Oil Consumption: 6
Slide 24: Strategic Growth Drivers
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 25: 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 26: 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 27: Azizia Panda United Company
_ Azizia Panda United Company
Slide 28: Retail Value Chain
Retail Value Chain Super Vendors / 50% Super • Selling area per store: 1,800-2,500 m2 Whole Sale • Sales intensity: SAR 407 /m2 /week • New Capex per store: SAR 8-12 mln Hyper Hyper Distribution • Selling area per store: 3,000-12,000 m2 Center 50% • Sales intensity: SAR 358 /m2 /week • New Capex per
Slide 29: Key Facts
Key Facts Customer Count Number of Stores and Selling Area CAGR 12% CAGR Selling Area 21% 547,000 m2 86 Mn 110 176,000 m2 44 Mn 54 52 2013 9 2007 2013 Hypermarkets Supermarkets 2007 Panda also started the convenience store format in 2013 and opened 23 stores during the year in KSA
Slide 30: Financial Performance
Financial Performance CAGR Revenue 11% Net income 94% 405 311 200 29 66 10,925 10,157 9,182 8,183 7,311 2009 2010 2011 2012 2013 Revenue (SAR millions) NI (SAR millions)
Slide 31: 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 32: Strategic Growth Drivers
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 33: Grocery Retail Market Size
Strategic Growth Drivers Grocery Retail Market Size SAR bln 148 CAGR 137 128 119 37 7.3% 111 35 104 32 30 26 28 29 11.3% 24 26 19 21 17 1 72 76 81 5.8% 61 64 68 Organic growth 2011 F 2012 P 2013 P 2014 P 2015 P 2016 P Small Grocery & Others Hypermarkets Supermarkets Modern retail share out of the to
Slide 34: Strategic Growth Drivers
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 35: Strategic Growth Drivers
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 98,000 m2 State of the art • Second largest fleet size in KSA with Distribution 454 vehicles Exce
Slide 36: Strategic Growth Drivers
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 37: Strategic Growth Drivers
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 38: Strategic Growth Drivers
Strategic Growth Drivers Modern grocery formats underpenetrated 24% 25% 41% 36% 62% 16% 57% 23% 39% 6 23% 59% New 36% 25% Avg. 19% 24% retail 15% formats UAE Italy Spain UK KSA Small Grocery Retails Hypermarkets Supermarkets Panda entered into convenient store format with the brand name “My Panda”
Slide 39: Savola Packaging Systems
Savola Packaging Systems
Slide 40: Plastics Value Chain
Plastics Value Chain Raw materials Offering Processing PET 80% Flexible Packaging PP 20% PE Rigid Packaging Flexible packaging Food Home Other Rigid Packaging PET bottles HDPE bottles Others
Slide 41: Key Facts
Key Facts SPS Volume Sales by Geography, 2013 SPS Volume Growth (Total: 134,000 MT) (‘000 MT) 12% 134 123 112 114 101 88% 2009 2010 2011 2012 2013 KSA Egypt Savola Plastics operates in 2 countries (KSA and Egypt) and exports to 35 countries
Slide 42: Financial Performance
Financial Performance CAGR Revenue 11% 103 100 100 91 1,120 1,002 1,053 70 884 749 2009 2010 2011 2012 2013 Revenue (SAR millions) NI (SAR millions)
Slide 43: Strategic Growth Drivers
Strategic Growth Drivers Organic growth Export to Europe • Push organic sales in • Leverage on cost KSA and Egypt advantage to grow • Increase primary stretch film business in flexible packaging in European markets KSA and enter flexible packaging in Egypt Also, consolidate industry in KSA and Egypt
Slide 44: Strategic Growth Drivers
Strategic Growth Drivers Market size (SAR blns) and Savola market share (%) Rigid Flexible Total Market Size Savola Share Market Size Savola Share Market Size Savola Share 5.0 3.0 5-6% 8.0 10-11% 13-14% KSA 2.8 3-4% 1.8 0% 4.6 2-3% Egypt Savola Plastics is dominant in the food and beverage businesse
Slide 45: Strategic Growth Drivers
Strategic Growth Drivers Total market of around 1.8 mln tonnes in Europe for plastic film Basic raw material prices higher in Europe by around 15-20% 1. Low Resin Cost Total delivered cost from delivered cost Electricity cost in 2. Low Energy KSA to Europe is less by 10- KSA is less by 4. Low 20% fo
Slide 46: Savola Investments
A Lilo Ds) , Dar Al Tamleek 4 Qoloisl Kaeo)! Kiyas Knowledge Economic City Savola Investments
Slide 47: Strategic Investments
Strategic Investments Market value* of Net profit 2013 Ownership as of Investment Savola holdings (SAR mlns) 31 Dec. 2013 (SAR mlns) Almarai 1,502 36.52% 14,916 Herfy 191 49% 2,356 Kinan/ 196 29.9% NA Masharef *Market value as of 1st May 2014 Investments which are complimentary to the Group’s core o
Slide 48: Non-core Investments
Non-core Investments All numbers are in SAR millions All book values as of 31st December 116 25 1,457 186 247 218 99 566 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 49: Investments Strategy
Investments Strategy Investment Executed strategy Asfan - In-kind contribution to Masharef project Yasmine Riyadh & Land - Sold to Kinan with realized capital gain of SAR 76 mln and SAR 77 mln in 2011 Hanaki Jeddah Medina land - Sold to KEC with realized capital gain of SAR 231 mln in 2013 Mutoun -
Slide 50: Financials
3 Financials
Slide 51: Revenue Growth
Revenue Growth SAR mlns CAGR 17% 27,391 26,370 25,196 21,029 17,917 13,821 10,410 2007 2008 2009 2010 2011 2012 2013 Foods Retail Plastics Strong and consistent revenue growth
Slide 52: Income from Core Operations
Income from Core Operations SAR mlns CAGR 22% 1,800 1,573 1,355 1,082 855 933 477 496 2007 2008 2009 2010 2011 2012 2013 2014 (G) Net income from operations has grown consistently
Slide 53: Return on Net Capital Employed
Return on Net Capital Employed SAR blns RONCE 12.9% 2.1 11.4% 3.3 Reallocation of NCE Non-Core Assets capital from non- core investments NCE Core Businesses 15.0 to core 9.9 businesses 2009 2013 2012 RONCE has increased over the past few years due to focus on core businesses
Slide 54: Total Shareholders’ Return
Total Shareholders’ Return Total shareholders’ return SAR per share of around 28% 62.8 40.0 32.0 28.7 1.25 1.30 1.40 2.00 2010 2011 2012 2013 Share price Dividend per share
Slide 55: Savola Group Share Price
Savola Group Share Price Share price increase of 75% 70 9,660 40 +39% 6,940 Savola Tadawul All Share Index
Slide 56: Debt Position
Debt Position 3.24 2.24 2.35 2.23 2.11 2.15 0.88 0.83 0.62 0.63 0.65 0.74 0.52 0.21 2007 2008 2009 2010 2011 2012 2013 Net Debt/EBITDA Healthy balance sheet with large amount of unutilized bank lines
Slide 57: Non-managed Businesses
Non-managed Businesses SAR mlns 2013 920 784 2012 853 549 2011 682 520 Managed 2010 527 360 Non Managed 2009 494 458 2008 102 101 2007 99 1,131 Reliance on non-managed businesses has reduced over time
Slide 58: Intangibles
4 Intangibles
Slide 59: 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 60: Corporate Social Responsibility
Corporate Social Responsibility — Makeen center for training and employing persons with disabilities — Accessibility program — Participating in Injaz programs — Supporting various organizations 207 persons graduated from Makeen program
Slide 61: Recognition for Intangibles
Recognition for Intangibles — Forbes ranked Savola as No. 1 among Top 500 companies (Food Industry sector) in 2013 across Arab World — Savola MD awarded CEO excellence award in 2013 by The Middle East Excellence Awards Institute — Savola has awarded Best Brand Award in Asia for 2013 by CMO Consultan
Slide 62: Appendix - Financial Results
Appendix - Financial Results
Slide 63: Annual Financials
Annual Financials (all figures are in SAR millions) Segment Wise Financials FY- 2013 FY- 2012 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 8,475 1,663 1,053 512 1,139 9,008 1,601 1,028 395 1,134 Oil-Start-up Markets* 1,222 160 48 12
Slide 64: Quarterly Financials
Quarterly Financials (all figures are in SAR millions) Segment Wise Financials Q1- 2014 Q1- 2013 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 1,995 342 211 172 233 2,786 610 438 150 459 Oil-Start-up Markets* 312 42 11 4 17 313 42 11
Slide 65: Thank You
— THANK YOU