Britvic — FY2018 Earnings Presentation
32 slides from Britvic's earnings presentation, Nov 29, 2018
Slide 1: Britvic PLC Preliminary Results 2018
BRITV IC PLC PRELIMINAR Y RESULTS 2018 29 NOV 2018
Slide 2: Delivering on our strategic priorities
Simon Litherland – Chief Executive Officer Delivering on our strategic priorities BRITVIC PLC PRELIMINARY RESULTS 2018 2
Slide 3: 2018 – Strong progress delivering our strategic priorities
2018 – STRONG PROGRESS DELIVERING OUR STRATEGIC PRIORITIES Successfully Volume and price navigating soft GB stills realisation drinks levy, returned to generating balanced underpinned by revenue growth revenue growth strength of low/no sugar portfolio Business capability Continued margin Revenue fro
Slide 4: Robinsons innovation is driving revenue and category growth
ROBINSONS INNOVATION IS DRIVING REVENUE AND CATEGORY GROWTH GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS Already #3* Leading the #1 soft drink premium category launch *in squash back into last 2 years brand growth ▶ Premium innovation to existing range ▶ 89% of ‘Cordials’ sales are ▶ Range of form
Slide 5: J2O returned to growth, Fruit Shoot declined in a competitive market
J20 RETURNED TO GROWTH, FRUIT SHOOT DECLINED IN A COMPETITIVE MARKET GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS The only brand endorsed by the government and parents New packaging across both core and Spritz ranges ▶ Core range declined due to increased competitive pressure Spritz in strong valu
Slide 6: Portfolio of low/no added sugar brands in strong growth
PORTFOLIO OF LOW/NO ADDED SUGAR BRANDS IN STRONG GROWTH GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS All below SDIL threshold* ▶ No caffeine or sugar ▶ Range of flavours ▶ Heritage branding ▶ Multivitamin natural ▶ Range of flavours to ▶ 25% market value ▶ FY market value and range of energy propo
Slide 7: Pepsi has gained share since the introduction of the soft drinks levy
PEPSI HAS GAINED SHARE SINCE THE INTRODUCTION OF THE SOFT DRINKS LEVY GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS Pepsi Lost share Pepsi value during value SDIL share share CO2 +130bps disruption +120bps ▶ Modest cola category volume decline ▶ Transparent approach of “price on ▶ Pepsi MAX generat
Slide 8: Challenging market in France, another strong performance in Ireland
CHALLENGING MARKET IN FRANCE, ANOTHER STRONG PERFORMANCE IN IRELAND GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS IRELAND FRANCE ▶ Focus on revenue management realised significant benefit Poor weather was a drag on the syrups category, which is and market share gains particularly weather sensitive
Slide 9: Robust performance in Brazil, International business unit recovery in H2
ROBUST PERFORMANCE IN BRAZIL, INTERNATIONAL BUSINESS UNIT RECOVERY IN H2 REALISE GLOBAL OPPORTUNITIES BRAZIL USA BENELUX TRAVEL & EXPORT ▶ Bela Ischia synergies ▶ Increased range, shelf ▶ Teisseire gained market ▶ New travel sector listings ahead of plan space and new retail share recently secured ▶
Slide 10: Investment in Britvic innovation delivered a record contribution in 2018
INVESTMENT IN BRITVIC INNOVATION DELIVERED A RECORD CONTRIBUTION IN 2018 GENERATE PROFITABLE GROWTH IN OUR CORE MARKETS % OF TOTAL REVENUE FROM OWNED-BRAND INNOVATION ▶ Since 2013 we have invested in innovation to realise category & 7.1 channel growth opportunities: • A more healthy portfolio, movin
Slide 11: Committed to building trust and respect
COMMITTED TO BUILDING TRUST AND RESPECT BUILD TRUST AND RESPECT IN OUR COMMUNITIES Healthier Healthier Healthier People Communities Planet • 16% reduction in calories • 3 year corporate charity • Signatory to UK Plastics per serve partnership with Diabetes Pact 2025 targets, including UK announced a
Slide 12: A strong financial performance
Mathew Dunn – Chief Financial Officer A strong financial performance BRITVIC PLC PRELIMINARY RESULTS 2018 12
Slide 13: A strong financial performance
A STRONG FINANCIAL PERFORMANCE Metric Reported % Organic* % Revenue £1,503.6m +5.1% +2.7% Adjusted EBIT £206.0m +5.4% +4.0% Adjusted EBIT Margin 13.7% - +10bps Adjusted EPS 56.3p +6.4% - DPS 28.2p +6.4% - Adjusted Net Debt/EBITDA 2.2x 2.0x (0.2)x Adjusted EBIT is a non-GAAP measure and is defined as
Slide 14: Value ahead of volume growth in European markets, Brazil improvement in Q4
VALUE AHEAD OF VOLUME GROWTH IN EUROPEAN MARKETS, BRAZIL IMPROVEMENT IN Q4 Market Volume +2.6% +7.6% (2.1)% +0.4% FY Ex‐Levy Ex‐Levy Market Value +6.9% +5.7% +10.8% +9.4% 0.0% (0.1)% Market Volume +7.7% +12.9% +4.2% +2.7% Q4 Ex‐Levy Ex‐Levy Market Value +14.8% +12.4% +18.6% +15.1% +8.5% +3.0% GB tak
Slide 15: Strong performance across GB portfolio
STRONG PERFORMANCE ACROSS GB PORTFOLIO GB Carbs GB Stills Total GB ex-SDIL ex-SDIL ex-SDIL CARBS ▶ H2 disrupted by CO2 shortage, now fully recovered. Volume +1.0% +2.9% +1.4% ▶ Growth led by low/no sugar portfolio ARP per litre +3.9% +1.2% +3.0% ▶ Price realisation benefit from new promotional price
Slide 16: Decline in France revenue primarily private label, Ireland growth led by low/no sugar
DECLINE IN FRANCE REVENUE PRIMARILY PRIVATE LABEL, IRELAND GROWTH LED BY LOW/NO SUGAR PORTFOLIO France Ireland FRANCE Volume (6.4)% +2.2% ▶ Contribution impact limited as majority of revenue decline from private label contracts ARP per litre +0.8% +4.4% ▶ Branded syrups decline primarily due to poor
Slide 17: Full year growth in Brazil and International with significantly improved H2
FULL YEAR GROWTH IN BRAZIL AND INTERNATIONAL WITH SIGNIFICANTLY IMPROVED H2 Brazil International organic BRAZIL ▶ Volume and pricing robust in difficult macro Volume +0.6% +5.5% ▶ Lower cost of goods and A&P spend benefiting margin ARP per litre +0.2% (0.5)% ▶ Bela Ischia synergies ahead of guidance
Slide 18: Overheads up due to depreciation, co-packing and bad debt
OVERHEADS UP DUE TO: DEPRECIATION, CO-PACKING AND BAD DEBT % Organic Constant ▶ A&P investment broadly flat FY 18 Exchange Rate ▶ Increase In fixed supply chain Total A&P spend 65.6 0.5 costs due to Incremental BCP depreciation and co-packing A&P as a % of revenue 4.6% (20) bps costs for innovation
Slide 19: £10.5m improvement in free cash flow generation, step-up from 2019
£10.5M IMPROVEMENT IN FREE CASH FLOW GENERATION, SIGNIFICANT STEP-UP FROM 2019 2018 £m 2017 £m 2018 Adjusted EBIT 206.0 195.5 ▶ Capital spend of £143.5m as BCP comes to an end Depreciation 44.8 40.3 Amortisation (non-acq related) 7.4 8.3 ▶ £38.4m outflow related to EBBA and East Coast acquisitions A
Slide 20: A solid financial platform underpinning the strategy
A SOLID FINANCIAL PLATFORM UNDERPINNING THE STRATEGY Volume Price PROFITABLE GROWTH STRONG UNDERLYING FCF CONVERSION Progressive Invest in business Selective M&A Maintain long-term dividend policy capability in new geographies or debt leverage within 50% pay out ratio Capex 3.5% to 4.5% of bolt-on t
Slide 21: Other items: 2019 guidance, funding platform, trading updates
OTHER ITEMS 2019 GUIDANCE FUNDING PLATFORM TRADING UPDATES • Anticipate low-single digit cost • £77m of 2007 USPP debt • Quarterly update to be simplified inflation repayable Feb 2019 • Support focus on long-term • Interest charge in range of £20m • Will be repaid from current strategic goals to £21
Slide 22: Clear priorities for 2019
Simon Litherland – Chief Executive Officer Clear priorities for 2019 BRITVIC PLC PRELIMINARY RESULTS 2018 22
Slide 23: Our strategy has continued to deliver strong shareholder returns
OUR STRATEGY HAS CONTINUED TO DELIVER STRONG SHAREHOLDER RETURNS Generate profitable Realise global Step-change our Build trust growth in our core opportunities business capability and respect markets Generating 3.9% revenue CAGR +330 bps margin growth 9.8% EPS CAGR 8.9% DPS CAGR * Excludes the impa
Slide 24: Business Capability Programme making good progress, completes late 2019
BUSINESS CAPABILITY PROGRAMME MAKING GOOD PROGRESS, COMPLETES LATE 2019 ACHIEVED 2016 TO-DATE FINAL PHASE COMPLETE LATE 2019 3 x new PET lines and 3 x new can lines already Installation of 3 x PET and 1 x Aseptic line completed late delivering benefits 2019 New on-site warehousing completed Leeds &
Slide 25: The Business Capability Programme – a platform for growth
THE BUSINESS CAPABILITY PROGRAMME – A PLATFORM FOR GROWTH INCREASED CAPACITY PACK FLEXIBILITY LIQUID CAPABILITY ▶ 330 ml can and ▶ 250ml can and 375ml PET ▶ Improved pasteurisation ▶ 1.5L PET ▶ 1.25 and 3 litre PET ▶ New preservative-free brands MEET DEMAND ACCESS GROWTH CHANNELS MEET CONSUMER NEEDS
Slide 26: Exciting innovation and marketing campaigns in 2019
EXCITING INNOVATION AND MARKETING CAMPAIGNS IN 2019 Broaden the appeal of our core brands Invest in small, fast- growing categories BRITVIC PLC PRELIMINARY RESULTS 2018 26
Slide 27: Confident of future growth
CONFIDENT OF FUTURE GROWTH Category Soft drinks is a robust and resilient category Is looking for Is more health Seeks greater Consumer Wants more choice conscious premium convenience experiences Sales and Route to Britvic Category Broad portfolio of Pipeline of Modern supply marketing market expert
Slide 28: Questions
Questions BRITVIC PLC PRELIMINARY RESULTS 2018 28
Slide 29: Appendix
Appendix BRITVIC PLC PRELIMINARY RESULTS 2018 29
Slide 30: A solid financial platform underpinning the strategy
A SOLID FINANCIAL PLATFORM UNDERPINNING THE STRATEGY ▶ £623m of USPP debt (at contracted rates) ▶ £120m of new notes in June 2018, repayable 2028 to 2033 ▶ Notes issued in GBP and EUR for fixed and floating rates ▶ £400m revolving credit facility in place to November 2021 ▶ Circa £1023m total debt f
Slide 31: Planning for a no deal Brexit
PLANNING FOR A NO DEAL BREXIT RISK MITIGATION Customs Admin • Limited change and readiness plans in place with suppliers Product Regulation • UK adopting EU standards, some limited changes ForEx Risk • 18 month hedging policy, 90%+ covered for F19 Finished Goods Tariffs • Majority made and consumed
Slide 32: ADR programme
ADR PROGRAMME ▶ ADRs give access to cross-border market liquidity ▶ Cost effective and convenient to own ▶ Quoted in U$D ▶ Dividends paid in U$D ▶ Symbol - BTVCY ▶ CUSIP - 111190104 ▶ Ratio - 1ADR = 2 ORD ▶ Underlying SEDOL : BON8QD5 ▶ Underlying ISIN : GB00B0N8QD54 ▶ Depositary : BNY MELLON BRITVIC