Britvic — FY2016 Earnings Presentation
41 slides from Britvic's earnings presentation, November 2016
Slide 1: Britvic Investor Presentation
Britvic Investor Presentation November 2016 Making life’s everyday moments more enjoyable
Slide 2: Strategy
Strategy Making life’s everyday moments more enjoyable 2
Slide 3: Another strong year despite challenging conditions
Another strong year despite challenging conditions Built a resilient business Another year of strong financial delivery Clear strategy that is working Well positioned to deliver sustained growth Making life’s everyday moments more enjoyable 3
Slide 4: Strong progress delivering our strategic priorities
Strong progress delivering our strategic priorities Portfolio delivering against consumer needs Profitable growth Increasing share in growth channels in core markets Growing contribution from innovation International Excellent first year in Brazil expansion Progress on Fruit Shoot in the USA Buildin
Slide 5: Portfolio delivering against consumer needs
PROFITABLE GROWTH IN OUR CORE MARKETS Portfolio delivering against consumer needs 9 Continued share gains, led by low / no sugar portfolio 9 Outstanding carbonates growth 9 More resilient stills performance in H2 9 Successfully innovating into growth segments 9 Share gains in both carbs and stills,
Slide 6: Increasing share in growth channels
PROFITABLE GROWTH IN OUR CORE MARKETS Increasing share in growth channels 9 Performing well in challenged grocery channel 9 Strong growth in discounters, leisure, licensed and convenience 9 Britvic delivered 32% of total market growth in “immediate refreshment” packs 9 Solid growth in grocery 9 Stro
Slide 7: Growing contribution from innovation
PROFITABLE GROWTH IN OUR CORE MARKETS Growing contribution from innovation % of revenue from innovation 3.9% 4.0% 3.1% 2.0% 1.5% 2010 2013 2014 2015 2016 • Excludes Brazil and week 53, and on a constant currency basis Making life’s everyday moments more enjoyable 7
Slide 8: Excellent first year in Brazil
INTERNATIONAL EXPANSION Excellent first year in Brazil INTEGRATION OPERATIONAL DELIVERY 9 Functional integration completed 9 Portfolio has gained market share 9 Talented senior management team retained 9 Successfully implemented price increases 9 Commenced centralisation to Sao Paulo to recover cost
Slide 9: Fruit Shoot launched in Sao Paulo, positive early signs
INTERNATIONAL EXPANSION Fruit Shoot launched in Sao Paulo, positive early signs 9 Leveraging Maguary brand equity 9 Listed in key retailers – 56% distribution 9 Initial focus on Sao Paulo city 9 Excellent in-store execution & sampling 9 4 flavours developed for local market 9 Full marketing campaign
Slide 10: Progress on Fruit Shoot in the USA
INTERNATIONAL EXPANSION Progress on Fruit Shoot in the USA SINGLE-SERVE MULTI-PACK 9 Route to market established with ASM 9 17% share of market maintained 9 On track to achieve 20% distribution target 9 Key listing in Pizza Hut secured 9 Meeting customer innovation expectations 9 Some listings impac
Slide 11: Business capability programme on track to deliver substantial benefits
BUILDING BUSINESS CAPABILITY Business capability programme on track to deliver substantial benefits Strong Progress in 2016 transforming our GB Supply Chain • 2016 was year 1 of a 3 year programme • Capital Investment in 2016 of £64m • Minimum 15% cash return confirmed from completion Leeds 9 Large
Slide 12: Industry leadership on public health
TRUST AND RESPECT Industry leadership on public health Reformulating drinks with Continual innovation in Using the power of our no compromise on taste products and range brands responsibly or quality » 19bn calories removed » First UK soft drinks company » Pepsi advertising only on » 68% of portfoli
Slide 13: 2017 priorities
2017 priorities Making life’s everyday moments more enjoyable 13
Slide 14: Challenges to overcome in 2017
Challenges to overcome in 2017 Impact of UK vote Proposed soft Retail landscape Input costs to leave EU drinks taxes » Grocery likely to » Uncertainty, » Commodity inflation » Well positioned remain challenging probable weaker and Sterling portfolio, income growth and weakness implementation inflati
Slide 15: Our 2017 strategic priorities are clear
Our 2017 strategic priorities are clear Generating Realise global Continue to Build trust and profitable growth opportunities in step change our respect in our in our core kids, family & business communities markets adult capability » Disciplined revenue » Realise potential in » Deliver phase 2 of »
Slide 16: Growth will come from revenue management, channel development and innovation
PROFITABLE GROWTH IN OUR CORE MARKETS Growth will come from revenue management, channel development and innovation CHANNELS INNOVATION » Reinforce revenue management » Nurture recent launches discipline » Build presence in premium adult » Continue successful new business wins » Leverage heritage cre
Slide 17: Investing to accelerate our performance in USA and Brazil
INTERNATIONAL EXPANSION Investing to accelerate our performance in USA and Brazil USA BRAZIL » Continue to build distribution » Complete centralisation to Sao Paulo » Drive brand awareness and trial » National roll out of Fruit Shoot » Improve on-shelf and in-store presence » Revitalise flavour conc
Slide 18: Extending business capability programme to deliver incremental benefits
BUILDING BUSINESS CAPABILITY Extending business capability programme to deliver incremental benefits Transformational GB supply Further opportunities to Cost and overhead chain programme improve business capability efficiency » Phase 1 on track and all on » Additional Fruit Shoot » Flattened managem
Slide 19: Helping consumers who want to make healthier choices
TRUST AND RESPECT Helping consumers who want to make healthier choices Starting from a base of an industry leading scale low/no sugar portfolio Over two thirds of our GB&I volume already excluded from proposed soft drink taxes Reformulating drinks Continual innovation in Using the power of our with
Slide 20: Summary – a strong performance and confident of future prospects
Summary – a strong performance and confident of future prospects A strong performance delivered in FY16 in challenging conditions Well positioned to deal with challenges in F17 and beyond Disciplined cost management continues Attractive future growth drivers Investing in business capability and deli
Slide 21: Financials
Financials Making life’s everyday moments more enjoyable 21
Slide 22: Market conditions generally remain tough but we are winning
Market conditions generally remain tough but we are winning GB IRELAND FRANCE BRAZIL » Take-home market » Take-home market » Take-home market » RTD and growth driven by in solid growth declined, reflecting concentrates water category challenging macro category in value » Driven by water conditions g
Slide 23: Another year of strong financial performance
Another year of strong financial performance +10.1% +8.4% (20)bps +6.5% (0.1)x +6.5% Group Increase Group Group Adjusted Full-year EBITA in net Revenue EBITA EPS of DPS Margin debt to EBITDA £1,431.3m £186.1m 13.0% 49.3p 1.8x 24.5p Organic margin increased 40bps Numbers include Brazil, week 53 and a
Slide 24: Resilient organic growth
Resilient organic growth Group revenue £1,321.6M +0.4% Group EBITA £178.8m +3.8% Group EBITA margin 13.5% +40bps Strong summer performance and enhanced operational leverage driving results Numbers exclude Brazil, week 53 and are on a constant currency basis. EBITA is defined as operating profit befo
Slide 25: Improving revenue trend enhanced by good summer
Improving revenue trend enhanced by good summer NET REVENUE % VS LY 5.7% Q1 Q2 Q3 Q4 -1.2% -0.7% -2.4% 9 Strong summer execution in UK 9 Rollout of Subway contract in GB and Ireland from July 9 Improved weather benefitted the 9 More resilient stills performance market • Excludes Brazil and week 53,
Slide 26: Business unit performance GB Carbs, GB Stills, France
Business unit performance GB Carbs GB Stills France Volume 4.8% (5.3)% (3.1)% ARP per litre 0.4% (1.8)% 0.6% Revenue 5.3% (7.0)% (2.5)% Brand contribution 8.7% (12.1)% (3.6)% Brand margin % 130bps (260)bps (30)bps Note: 2016 numbers are 52 week to enable an accurate comparison to last year Making li
Slide 27: Business unit performance Ireland, International, Brazil
Business unit performance Ireland International* Brazil** Volume 3.6% 1.5% 7.8% ARP per litre (0.4)% (2.0)% 10.0% Revenue 5.8% (0.6)% 18.6% Brand contribution 2.6% (30.4)% 7.2% Brand margin % (100)bps (780)bps (200)bps Note: 2016 numbers are 52 week to enable an accurate comparison to last year Maki
Slide 28: Another year of outstanding carbonates performance in GB
Another year of outstanding carbonates performance in GB 40.0 35.0 PEPSI VOLUME SHARE* 30.0 Broad portfolio growth led by Pepsi 25.0 Max, Tango and 7UP Free 20.0 15.0 10.0 5.0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *Canadean – Total Cola Market Volume led full year revenue growth
Slide 29: More resilient GB stills performance
More resilient GB stills performance Improved Robinsons trajectory: H1 -10.0%, H2 -4.6% 9 Now fully lapped removal of added sugar range 9 Flavour range, pack format and channel growth opportunities Fruit Shoot declined but taking share of category 9 Added vitamins and reduced sweetness in 2016 9 Dou
Slide 30: Relentless focus on delivering cost efficiency
Relentless focus on delivering cost efficiency FY16 £M FY15 £M % Total A&P spend 68.6 71.1 3.5 A&P % revenue 4.9% 5.6% (70)bps Non-brand A&P 12.1 9.7 (24.7) Fixed Supply Chain 95.8 92.6 (3.5) Selling Costs 124.9 118.6 (5.3) Overheads & Other Costs 120.6 123.0 2.0 Total fixed cost base 353.4 343.9 (2
Slide 31: Have delivered continued margin growth since 2013
Have delivered continued margin growth since 2013 CONSISTENT GROWTH SINCE 2013 Clear drivers of future margin growth 13.2% 13.5% 12.0% GB supply chain programme 10.4% Further cost and overhead 9.2% efficiency Revenue management Margin accretive innovation Channel mix International profitability 2012
Slide 32: A solid financial platform underpinning the strategy
A solid financial platform underpinning the strategy 9 Additional £175m private placement funding 9 £400m revolving credit facility extension to 9 Maturing 2025 to 2032, Fixed and floating rate November 2021 9 Replacing £120m notes maturing early 2017 9 Circa £958m total debt facilities from Feb 201
Slide 33: Proposed distributor acquisition in Ireland
PROFITABLE GROWTH IN OUR CORE MARKETS Proposed distributor acquisition in Ireland Overview 9 Supplies full range of products to pubs, bars and restaurants 9 Serves c.1000 outlets in the East of Ireland and is one of the market leaders in Dublin Rationale for acquisition 9 Will accelerate growth in p
Slide 34: Comfortable with market expectations for 2017
Comfortable with market expectations for 2017 Mid-single digit inflation from Will seek to mitigate headwinds through underlying commodities and f/x revenue management & focus on cost control Margin growth likely to be more Continuing to invest in growth drivers constrained in 2017 Anticipate £10m-£
Slide 35: Appendix
APPENDIX Making life’s everyday moments more enjoyable 35
Slide 36: Segmental analysis
Segmental analysis GB CARBS 2016 2015 % VAR Volume 1,264.3 1,206.7 4.8 ARP per litre 47.1p 46.9p 0.4 Revenue 595.7 565.7 5.3 Brand contribution 244.7 225.1 8.7 Brand margin % 41.1% 39.8% 130 bps GB STILLS 2016 2015 % VAR Volume 357.6 377.5 (5.3) ARP per litre 83.7p 85.2p (1.8) Revenue 299.2 321.6 (7
Slide 37: Segmental analysis
Segmental analysis IRELAND 2016 2015 % AER % CC Volume 209.5 202.2 3.6 3.6 ARP per litre 51.1p 49.7p 2.8 (0.4) Revenue 131.7 120.4 9.4 5.8 Brand contribution 47.2 44.2 6.8 2.6 Brand margin % 35.8% 36.7% (90) bps (100) bps INTERNATIONAL 2016 2015 % AER % CC Volume 41.9 41.3 1.5 1.5 ARP per litre 120.
Slide 38: Segmental analysis
Segmental analysis BRAZIL 2016 2015 % AER % CC Volume 184.6 ARP per litre 48.5p Revenue 89.5 Brand contribution 17.5 Brand margin % 19.6% Making life’s everyday moments more enjoyable 38
Slide 39: Cash flow
Cash flow 2016 2015 EBIT 178.7 169.0 Depreciation and amortisation 51.4 42.1 EBITDA 230.1 211.1 Working capital (25.8) 10.3 Capital spend (121.9) (60.9) Pension contributions (21.6) (21.6) Other spend (49.9) (49.6) Underlying free cash flow 10.9 89.3 Dividends (60.9) (52.9) Underlying adjusted net d
Slide 40: Exceptional costs
Exceptional costs Item £m Brazil integration 5.2 Closure of operations in India 2.4 Gain on disposal of property (3.2) Strategic restructuring costs 9.0 Fair value gains (11.3) Unwind of discount on deferred consideration 3.3 Debt repayment charge 0.6 Total 6.0 Making life’s everyday moments more en
Slide 41: 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 Making