Britvic — H1 2009 Earnings Presentation
45 slides from Britvic's earnings presentation, May 2009
Slide 1: Interim Results 2009
\d BRITVI Interim Results 2009
Slide 2: Gerald Corbett, Chairman
\d BRITVIC Gerald Corbett Chairman
Slide 3: John Gibney, Group Finance Director
John Gibney Group Finance Director
Slide 4: Agenda
Agenda Financial performance John Gibney • A strong and resilient GB/International performance • Ireland continues to suffer from macro economic challenges Britvic and the market review Paul Moody • Consumer dynamics in a recession • Britvic brands ahead of the market Q&A
Slide 5: Financial Headlines
Financial Headlines H109 H108 % £’m £’m change Revenue 483.2 454.7 6.3 EBIT 31.9 31.4 1.6 EBIT Margin 6.6% 6.9% (30)bps Profit After Tax 14.8 13.0 13.8 Free Cashflow (24.6) (10.5) (134.3) Adjusted Net Debt (442.7) (454.1) 2.5 Basic Earnings Per Share 6.9p 6.1p 13.1 Interim Dividend Per Share 4.1p 3.
Slide 6: Group EBIT Analysis
Group EBIT Analysis H109 H108 % change £’m £’m Branded Volume (million litres) 876.6 834.4 5.1 Branded ARP 52.0p 51.0p 2.0 Total Revenue* 483.2 454.7 6.3 Brand Contribution* 180.7 176.1 2.6 Non-brand A&P (4.1) (4.5) 8.9 Fixed Supply Chain (49.0) (46.9) (4.5) Selling Costs (54.2) (53.1) (2.1) Overhea
Slide 7: GB Stills
GB Stills % H109 H108 Change Group Brand Contribution £’m £’m Volume (million litres) 246.0 232.0 6.0 ARP per litre (pence) 68.6 69.7 (1.6) Revenue 168.7 161.8 4.3 38.6% Brand Contribution 69.8 70.2 (0.6) Brand Contribution 41.4% 43.4% (2.0)pts Margin Strong volume and revenue performance driven by:
Slide 8: GB Carbonates
GB Carbonates % H109 H108 Change Group Brand Contribution £’m £’m Volume (million litres) 495.6 461.0 7.5 ARP per litre (pence) 41.2 40.2 2.5 Revenue 204.4 185.4 10.2 40.7% Brand Contribution 73.6 70.1 5.0 Brand Contribution 36.0% 37.8% (1.8)pts Margin Strong volume and revenue performance driven by
Slide 9: International
International % H109 H108 Group Brand Contribution Change £’m £’m International 1.7% Volume (million litres) 11.4 11.6 (1.7) ARP per litre (pence) 78.9 69.0 14.3 Revenue 9.0 8.0 12.5 Brand Contribution 3.0 2.5 20.0 Brand Contribution 33.3% 31.3% 2.0pts Margin Revenue in double-digit growth due to:
Slide 10: Ireland (euro-based)
Ireland (euro-based) % H109 H108 Change €’m €’m Group Brand Contribution Volume (million litres) 123.6 129.8 (4.8) ARP per litre (cents) 69.3 73.7 (6.0) 19.0% Revenue 116.7 135.4 (13.8) Brand Contribution 39.6 45.3 (12.6) Brand Contribution 33.9% 33.5% 40bps Margin EBITA 1.0 6.8 (85.3) EBIT 0.0 5.8
Slide 11: Ireland (sterling-based)
Ireland (sterling-based) % H109 H108 Group Brand Contribution Change £’m £’m Volume (million litres) 123.6 129.8 (4.8) 19.0% ARP per litre (pence) 60.1 54.1 11.1 Revenue 101.1 99.5 1.6 Brand Contribution 34.3 33.3 3.0 Brand Contribution 33.9% 33.5% 40bps Margin EBITA 0.9 5.0 (82.0) EBIT 0.0 4.3 (100
Slide 12: Fixed Costs
Fixed Costs H109 H108 % Change £’m £’m Non-brand A&P (4.1) (4.5) 8.9 Total A&P spend (28.9) (29.1) 0.7 A&P as a % of net 6.3% 6.8% 50bps branded revenue Fixed Supply Chain (49.0) (46.9) (4.5) Selling Costs (54.2) (53.1) (2.1) Overheads & Other (41.5) (40.2) (3.2) Operational Efficiency Delivers Volu
Slide 13: EBIT to Earnings
EBIT to Earnings H109 H108 % Change £’m £’m EBIT 31.9 31.4 1.6 Interest (11.9) (14.2) 16.2 Profit before tax 20.0 17.2 16.3 Tax (5.2) (4.2) (23.8) Tax rate 26.0% 24.1% (1.9)pts Profit after tax 14.8 13.0 13.8 A Continued Strong Earnings Performance Note: All numbers are before exceptional costs
Slide 14: Exceptional Items
Exceptional Items H109 £’m Ireland Restructuring 10.0 Implementation of Group 2.0 structure Transitional Share Awards 0.8 Total exceptional items 12.8 Total exceptional items after tax 9.9 Restructuring Costs Weighted Towards H1
Slide 15: Cashflow
Cashflow H109 H108 % £m £m change Operating profit pre-exceptionals 31.9 31.4 1.6 Depreciation & amortisation 21.6 23.8 (9.2) EBITDA 53.5 55.2 (3.1) Working capital (23.9) (31.4) 23.9 Capital expenditure (26.5) (12.1) (119.0) Pension contribution (10.0) (10.0) 0.0 Other (17.7) (12.2) (45.1) Free cas
Slide 16: A Strong Refinancing Result
A Strong Refinancing Result z New £283M bank facility in z US private placement debt of place £229M Forward start facility Fully hedged and swapped agreed April 2009 into sterling in February 2007 5 out of 6 banks retained All-in swapped fixed Abbey Santander joins coupon rate of 6% our ba
Slide 17: Guidance for 2009
Guidance for 2009 Additional revenue: Total innovation this year to add 1% to the GB top line Costs: Raw materials inflation guidance remains unchanged at 4.0 to 4.5% Interest similar to 2008. 2009 sees lower LIBOR but higher pricing Tax rate similar to H1 Savings: GB £1.0-1.5m in 2009, £2
Slide 18: H1 Summary
H1 Summary Track record of growth continues A more secure balance sheet Outperformance across GB/Intl Revenue growth from ARP Irish trading remains challenging Growth in earnings and dividends Continued Delivery Of Shareholder Value 18
Slide 19: Paul Moody, Chief Executive
Paul Moody Chief Executive 19
Slide 20: Agenda
Agenda Financial performance John Gibney • A strong and resilient GB/International performance • Ireland continues to suffer from macro economic challenges Britvic and the market review Paul Moody • Consumer dynamics in a recession • Britvic brands ahead of the market Q&A
Slide 21: GB Soft Drinks Market Volume
GB Soft Drinks Market Volume 2006/07 2007/08 200,000 2008/09 190,000 180,000 170,000 160,000 150,000 140,000 130,000 120,000 110,000 100,000 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 9 9 9 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 0 0 1 2 2 1 2 2 3 4 5 5 6 7 7 8 9 9 .1 .1 .1 .1 .1 .0 .0 .0 .0 .0 .0
Slide 22: GB Stills Market Volumes
GB Stills Market Volumes 000's Litres 2006/07 2007/08 2008/09 Stills Driving The Decline But Showing Early Signs Of Improvement Source: ACNielsen Scantrack Apr 2009: Take Home 22
Slide 23: GB Market Volumes And Growth Rates
GB Market Volumes And Growth Rates 3.1% 5.8% 4.4% -6.5% -2.9% -4.0% Carbs -7.6% -6.6% -7.1% 4.6% 2.9% 3.1% 11.6% -8.6% -2.9% 0.4% -5.3% -3.0% -5.2% -5.7% -9.0% -9.0% -3.9% -7.1% -4.9% 1.7% -0.8% Stills -8.3% -14.8% 3.0% -1.8% 0.7% 1.1% -2.4% -2.4% Diet/Low Cal -36.7% -26.5% Regular / Full Sugar Ever
Slide 24: GB Channel Dynamics
GB Channel Dynamics TAKE HOME CONVENIENCE & IMPULSE Market: decline in H1 but latest data Market: in decline with both shows an improving performance with convenience and impulse under volumes flat and value in growth pressure Britvic: Volume & value growth with Britvic: In significant growth year o
Slide 25: Core Brands Review
Core Brands Review • 4.4% category volume • 4.0% fruit carbonates • 4.0% category growth category volume volume decline decline, lemon & lime in growth • +7.9% outperformance • 6.3% out of the category performance in the • +21.5% outperformance last 12 weeks of the category • Volume share gain of 1.
Slide 26: Core Brands Review
Core Brands Review z Remaining in growth z Category in 4.9% z Category in 3.6% Grocery volume decline volume decline z Still the number 1 z Robinsons z Value share up 0.9% packaged drink in outperforming the Licensed On-Premise category by +8.2% z Reformulation and repackaging to z Licensed z Last 1
Slide 27: Seed Brands Review
Seed Brands Review z Plain-water category down 9% z Category in value growth of 1.8% (MAT) z Drench outperforming z Volume share of 5.0% category by 225% in last 12 weeks z Juicy Drench z Ambition to be the launched Spring 2009 number 2 sports drink by summer 2011 z 12 weeks after launch has the 2nd
Slide 28: Seed Brands Review
Seed Brands Review z New pack formats to z Broadening the z A year of consolidation drive in-home footprint beyond to bring the brand in- availability London house z Listing confirmed in z Production brought in- z Production in-house house January 2009 early 2010 major multiples z Now listed in the
Slide 29: 2009 Innovation & Product Launches
2009 Innovation & Product Launches H1 H2 Great Innovation Delivery Through The Year 29
Slide 30: 2009 Brand Investment
2009 Brand Investment Heavyweight TV 2 major campaigns Wimbledon On TV for the first campaign z Twenty/20 Cricket in z An on-pack to win time z Back on TV across the market now tickets to the z Olympic gold summer championships medallist Tim Brabant z Tie-in with Nokia still to come z Laura Robson s
Slide 31: Irish Soft Drinks Market Volume
Irish Soft Drinks Market Volume 2007/08 2008/09 Macro Conditions Impacting The Soft Drinks Category Source: Total Scantrack ROI (grocery multiples and forecourts) 31
Slide 32: Irish Market Volume And Growth Rates
Irish Market Volume And Growth Rates 000's Litres (6.2%) (12.1%) (5.1%) Stills (16.1%) (3.2%) 0.0% (5.1%) Carbs 0.3% (12.1%) (3.5%) All Categories Suffering From The Downturn Source: ACNielsen Scantrack to 26th March 2009: Take Home 32
Slide 33: Britvic Ireland
Britvic Ireland Faster, Simpler, The number 1 water The number 1 orange Winning z “Bodies never lie” TV carbonate z Investing in our campaign z Nee TV campaign production facilities z New packs and z Delivering its message z SAP implementation flavours through humour underway z Munster Rugby z Major
Slide 34: Summary
Summary Core & Seed Brands that are getting stronger Channel growth across the board Innovation continues to deliver and succeed A Stabilising market in GB Ireland in shape for future growth An Everyday-To-Premium brand portfolio Delivering On A Clear Strategy 34
Slide 35: BRITVIC
BRITVIC
Slide 36: Interim Results Supplemental Information
Interim Results Supplemental Information
Slide 37: Strong And Growing Market Positions
Strong And Growing Market Positions Stills (£3.5bn) Carbonates (£2.6bn) Take-Home (£6.1bn) Stills (£0.8bn) Carbonates (£1.5bn) Licensed On-Trade (£2.3bn) Source: AC Nielsen Scantrack data to 11 April 2009 & Licensed On Trade data to January 2009 Total Coverage MAT 37
Slide 38: Carbonates Market Volume
Carbonates Market Volume 000's Litres 2006/07 2007/08 2008/09 Source: ACNielsen Scantrack Apr 2009: Take Home 38
Slide 39: The GB Carbonates Market
The GB Carbonates Market Sub-sectors include cola, flavoured carbonates, lemonade, mixers and glucose/stimulant drinks Over 60% channelled though Take-Home Take home 62% Licensed On-Premise 38% market Take-Home market dominated by CCE (53%) Britvic #2 (12.5%) GSK #3 (8%) – Lucozade GB’s le
Slide 40: The Stills Market in GB
The Stills Market in GB Sub-sectors include squash, water, fruit drinks, pure juice and sports drinks Number 1 in stills in UK Over 80% channelled through Take-Home market Take-Home market fragmented Britvic #1 (10.7%) Take home Licensed On-Premise 18% Danone #2 (9.5%) – (Evian, Volvic, Badoit 8
Slide 41: Channels to Market in GB
Channels to Market in GB 3 main channels to market: Take Home (£6.1bn) (1) Customers include large grocery retailers, (primarily Tesco, J Sainsbury, Asda, Wm Morrison), high street stores (for example, WHSmith), ‘‘impulse’’ channel retailers (convenience stores, garage forecourt sales and off-lice
Slide 42: Flawlessly-Executed Brand Equity Programmes…
Flawlessly-Executed Brand Equity Programmes… 42
Slide 43: …Coupled With Winning In-Store Execution
…Coupled With Winning In-Store Execution 43
Slide 44: The GB Take-Home Market
The GB Take-Home Market Take-Home by Retail Value Sales (£6.1 billion) 07-09 YOY CAGR Stills (2.4)% (4.6)% Pure Juice 0.6 % (4.0)% Juice Drinks (1.1)% (2.2)% Plain Water (8.7)% (10.5)% Squash (1.6)% 3.6 % Dairy (0.6)% 1.6 % Smoothies (10.2)% (30.0)% Water Plus (8.4)% (7.6)% Sports Drinks 9.1 % 1.0 %
Slide 45: The GB Licensed On-Premise Market
The GB Licensed On-Premise Market Licensed On-Trade by Retail Value Sales (£2.3 billion) 07-09 YOY CAGR Stills (2.2)% (2.0)% Pure Juice / (2.0)% (1.2)% Fruit Drinks Mixers (2.3)% (2.7)% Squash (1.1)% (0.7)% Water (7.4)% (6.4)% Carbonates (3.1)% (2.8)% Cola (2.0)% (1.6)% Lemonade (3.7)% (4.1)% Flavou