East African Breweries Plc · NSEKE:EABL
East African Breweries — H1 F19 Earnings Presentation
32 slides from East African Breweries's earnings presentation, 2019
Slide 1: EABL 2019 Half-Year Results Presentation
EABL 2019 East African breweries HALF-YEAR RESULTS ltd FULL YEAR results presentation 1
Slide 2: Half Year Results Briefing
HALF YEAR F19 H1 Commercial Review RESULTS Andrew Cowan BRIEFING F19 H1 Financial Performance Gyuri Geiszl F19 H2 Priorities Andrew Cowan Q&A 2
Slide 3: F19 Half Year Review
F19 HALF YEAR REVIEW Andrew Cowan Group Managing Director
Slide 4: We are clear on our ambition
We are clear on our To create the best ambition performing, most trusted and respected consumer products company in Africa Vibrant mainstream beer Explode mainstream spirits Win in premium Viable value recruitments Aspirational and accessible innovations Route to consumer Stakeholder r
Slide 5: Double digit growth for two consecutive halves
DOUBLE DIGIT GROWTH FOR TWO CONSECUTIVE HALVES Volume +13% Net sales +13% Gross profit +20% Profit after tax +33% Operating Cash Conversion 118% Interim dividend KES 2.5/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 72% +12% UGANDA 16% +12% TANZANIA 12% +26% Total EABL 100% +13% 6
Slide 7: Recovery of Senator Keg and strong growth in mainstream spirits
RECOVERY OF SENATOR KEG AND STRONG GROWTH IN MAINSTREAM SPIRITS Premium Mainstream Value RTD’s +3% +17% +16% +1% Beer Reserve Premium Mainstream Value +54% -3% +29% -2% Spirits 7
Slide 8: Innovation NSV contribution increased by 20%
INNOVATION NSV CONTRIBUTION INCREASED BY 20% KENYA UGANDA TANZANIA +18% +10% +45% 8
Slide 9: Kenya: Senator keg and spirits grow
Kenya SENATOR KEG AND SPIRITS GROW +12%* DOUBLE DIGIT, BOTTLED BEER FLAT Bottled beer flat despite excise Mainstream spirits increase growing +30% Scotch grew +37% +15% growth in innovation brands Senator +35% Total spirits in growth supported +17% growth by RTM initiatives constrained by uncontroll
Slide 10: Uganda: premium beer and mainstream spirits drive growth
Uganda PREMIUM BEER AND MAINSTREAM +12%* SPIRITS DRIVE GROWTH Reserve grew +6% Tusker Lite and Guinness Innovation delivering +21% growth driven by Uganda in Premium beer Waragi Pineapple Growth in Total Spirits +16% * Net sales growth 10
Slide 11: Tanzania: Serengeti became largest brand
Tanzania SERENGETI BECAME LARGEST BRAND +26%* IN TANZANIA AFTER GROWING 65% Strong performance Premium of Serengeti Serengeti Lite Lager volumes up Spirits in growth driven launch of Smirnoff X1 11 * Net sales growth
Slide 12: KES 14bn Kisumu investment
KES 14bn Capital investments in the last 5.5 Kisumu years to meet increasing Demand investment 13.0 CAPEX Disposal 6.8 5.6 4.9 5.0 4.8 3.7 2.5 0.9 0.2 0.3 0.1 FY14 FY15 FY16 FY17 FY18 FY19 HY
Slide 13: People
PEOPLE Robust Talent Assurance approach with critical roles filled including the new Kisumu brewery. Organizational Efficiency: reducing organisational layers and widening spans for simplified decision making and embedding cost saving culture. Capability: LEAP program ran for all level 4s and
Slide 14: Excellence Awards
EXCELLENCE AWARDS Alcoholic beverages plant of the year & Sustainability initiative of the year – Africa food industry excellence awards Spirits Team, Plant of the Year, Partnership of the Year, President's Team Award, highest percentage NSV growth in F18 – Diageo ‘Pride of Africa’ Awards Winn
Slide 15: Social Responsibility
SOCIAL RESPONSIBILITY Community Investment initiatives: Murara borehole project in Meru to benefit 10,000 people UBL planted over 40 hectares of trees Serengeti sponsored the national women premier league for a duration of three years Responsible Drinking initiatives: Great impact in the
Slide 16: Social Responsibility
SOCIAL RESPONSIBILITY Launch of Research Paper: Titled “Sorghum Production In Kenya” sharing knowledge and best practices. Project Heshima: Vocational training project had graduation of 285 students from various counties Ongoing stakeholder engagement: Engagements with Government, Private Se
Slide 17: Thank You
Thank You Please hold the questions to the end 17
Slide 18: F19 H1 Financial Performance
F19 H1 FINANCIAL PERFORMANCE Gyuri Geiszl Group Finance and Strategy Director 18
Slide 19: Financial Highlights
Financial Highlights H1 F19 vs LY Volume +13% Net sales KES 41.6bn +13% Operating profit KES 11.4bn +23% Profit after tax KES 6.6bn +33% Operating cash conversion 118% -8ppt Net debt KES 23.7bn +14% Interim dividend KES 2.5/share 19
Slide 20: Strong volume growth across categories
Strong volume growth across categories H1 F19 H1 F18 vs LY KES bn KES bn Volume (mEU) 7.1 6.3 +13% Volume growth driven by Senator Keg recovery in Kenya, continued growth of Serengeti Gross sales 76.4 68.3 +12% in Tanzania, mainstream spirits and innovation across the markets Excise duties (34.8)
Slide 21: Movements in net sales (KES bn)
Movements in net sales (KES bn) 42 41 0.7 1.1 40 39 1.1 41.6 38 1.9 37 0.0 36 36.8 35 H1 F18 Kenya Senator Kenya Tanzania Uganda H1 F19 Bottled Beer Spirits • Recovery of Senator in Kenya in a stable operating environment • Uganda delivering strong mix • Continued strong performance in Tanzania driv
Slide 22: Additional CoGS savings delivered
Additional CoGS savings delivered Cost of sales increase +8% H1 F19 H1 F18 vs LY behind volume growth +13%, KES bn KES bn CoGS/case down -5% Volume (mEU) 7.1 6.3 +13% Also helped by mix: increase in volume of Senator keg Gross sales 76.4 68.3 +12% Additional productivity Excise duties (34.8) (
Slide 23: Re-investment of productivity savings continues
Re-investment of productivity savings continues H1 F19 H1 F18 vs LY KES bn KES bn Selling and distribution grew Gross profit 19.2 16.0 +20% by 16% from investing behind our brands to accelerate Selling & distribution (3.7) (3.1) -16% growth, in line with strategy Administrative expenses (4.2) (4.0
Slide 24: Lower net borrowings and interest charge
Lower net borrowings and interest charge H1 F19 FY F18 vs LY KES bn KES bn Strong cash delivery offsets impact of higher capital expenditure, net borrowings down +14% Net borrowings (23.7) (27.5) +14% Net finance charges also reduced due to lower interest rates and capitalisation of interest on
Slide 25: Double digit growth in Profit after tax
Double digit growth in Profit after tax H1 F19 H1 F18 vs LY KES bn KES bn Operating profit 11.4 9.2 +23% Finance costs, net (1.7) (2.0) +14% Profit before tax 9.7 7.3 +33% Income tax expense (3.1) (2.3) Profit after tax 6.6 5.0 +33% EPS (KES/share) 6.5 5.2 +25% Interim dividend 2.5 2.00 +25% (KES/sh
Slide 26: Consistently strong cash performance
Consistently strong cash performance H1 F19 H1 F18 vs LY KES bn KES bn Operating profit 11.4 9.2 2.2 Higher operating profit Depreciation and amortization 2.0 1.8 0.2 translates to robust Gain on land sale - (0.7) 0.7 operating cash delivery Working capital movements due to consistent working capi
Slide 27: Capital expenditure increased further due to Kisumu
Capital expenditure increased further due to Kisumu F19 H1 investment of KES 4.8bn (F18 H1 KES 5.0bn) Construction of new brewery in Kisumu – KES 3.4bn. Total cost is expected to be KES 14bn (initial estimate KES 15bn), spent KES 10.2bn so far, remaining KES 3.8bn to be paid in F19 H2 and F20 ID
Slide 28: Thank You
Thank You Please hold the questions to the end 28
Slide 29: F19 H2 Priorities
F19 H2 PRIORITIES Andrew Cowan Group Managing Director 29
Slide 30: Priorities going forward
Priorities going forward Opportunities for further growth Commercialize the Kisumu brewery Bottled beer back to growth in Kenya Win in premium leading with Scotch Deliver productivity initiatives Accelerate mainstream spirits Deliver key innovation projects Maintain focus on People 30
Slide 31: Q & A Session
Q & A Session 31
Slide 32: 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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