Slide 1: United Spirits Limited cover letter to exchanges
DIAGEO INDIA United Spirits Limited Registered Office: UBTower #24 Vittal Mallya Road Bengaluru 560 001 Tel: +91 802221 0705 Fax:+91 803985 6862 June 4,2019 www.diageoindia.com BSE Limited, (Regular Office & Corporate Relations Dept.) Dalal Street, Mumbai 400 001 Scrip Code: 532432 National Stock Ex
Slide 2: F19 Full Year Results Roadshow
F19 FULL YEAR RESULTS ROADSHOW 3 JUNE 2019
Slide 3: Anand Kripalu, MD & CEO
ANAND KRIPALU MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
Slide 4: What we will cover today
WHAT WE WILL COVER TODAY FY19 REVIEW PROGRESS AGAINST STRATEGY F19 FINANCIAL PERFORMANCE CONFIDENCE IN THE FUTURE 3
Slide 5: What we will cover today
WHAT WE WILL COVER TODAY FY19 REVIEW PROGRESS AGAINST STRATEGY F19 FINANCIAL PERFORMANCE CONFIDENCE IN THE FUTURE 4
Slide 6: We have the leading portfolio across price points
WE HAVE THE LEADING PORTFOLIO ACROSS PRICE POINTS Consumer Focus brands prices* Luxury >Rs.2000 Premium Rs.900‐2000 Prestige Rs.350‐900 Popular <Rs.350 *Average consumer prices in India, 750ml bottle 5
Slide 7: F19 in a nutshell
F19 IN A NUTSHELL Net sales +10% Prestige & Above net sales +15% Gross margin 48.8%; +21bps EBITDA margin 14.3%; +175 bps Interest costs ‐18% Profit after tax 659 Cr; +17% * Gross margin for F18 has undergone a change due to a reclassification to maintain conformity – please refer to Annexure in Pre
Slide 8: FY19 external recognition highlights
FY19 ‐ EXTERNAL RECOGNITION HIGHLIGHTS Corporate Governance Rating Finance Leadership Awards ICRA assigned a Corporate Excellence Award Corporate Sanjeev Churiwala named CFO Governance Rating USL received Dun & Bradstreet of the year, FMCG category, of CGR2, reinforcing 2019 Award for Corporate ICAI
Slide 9: What we will cover today
WHAT WE WILL COVER TODAY FY19 REVIEW PROGRESS AGAINST STRATEGY F19 FINANCIAL PERFORMANCE CONFIDENCE IN THE FUTURE 8
Slide 10: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 9
Slide 11: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 10
Slide 12: Playing into India's top passion points
Strengthen & accelerate core brands PLAYING INTO INDIA’S TOP PASSION POINTS Music Food Cricket 11
Slide 13: Bringing passion point alive through purpose-led marketing
Strengthen & accelerate core brands BRINGING PASSION POINT ALIVE THROUGH PURPOSE‐LED MARKETING #challengeaccepted campaign RCB app Coa ch 12
Slide 14: Leveraging our extensive Scotch portfolio
Strengthen & accelerate core brands LEVERAGING OUR EXTENSIVE SCOTCH PORTFOLIO OUR PORTFOLIO F19 SCOTCH NET SALES GROWTH (%) 46% Bottled in Origin (BIO) 28% 18% Overall Bottled in Origin Bottled in India Bottled In India (BII) 13
Slide 15: Bringing category vibrancy through innovation
Strengthen & accelerate core brands BRINGING CATEGORY VIBRANCY THROUGH INNOVATION RE‐RECRUIT RECRUIT DISRUPT through new variants through new propositions through untapped categories 14
Slide 16: Making Scotch hip: recruiting new consumers
Strengthen & accelerate core brands MAKING SCOTCH HIP: RECRUITING NEW CONSUMERS 15
Slide 17: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 16
Slide 18: Multi-pronged approach: Evolve route to consumer
Evolve route to consumer MULTI‐PRONGED APPROACH AFFLUENT INDIA MIDDLE INDIA ASPIRING INDIA Unique experiences, Leverage outlets to build brand Focus on retained states, Weddings & Banquets equity support franchisees 17
Slide 19: Enabling the multipronged approach
Evolve route to consumer ENABLING THE MULTIPRONGED APPROACH Affluent India Middle India Aspiring India • Dedicated team driving joint • Clear outlet execution • Dedicated teams driving business planning with top standards distribution in retained states 1300 Key Accounts • Customized activations at
Slide 20: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 19
Slide 21: Productivity is now embedded in our organization
Driving productivity PRODUCTIVITY IS NOW EMBEDDED IN OUR ORGANIZATION F19 Net Revenue • Efficient commercial spends Management Gross margin • Positive price/mix from P&A growth improvement • Rate and feature optimization +21bps COGS • Manufacturing footprint optimisation • Efficiency in agency and p
Slide 22: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 21
Slide 23: Corporate citizenship
Corporate citizenship CORPORATE CITIZENSHIP Shape regulatory environment Relatively modest ED hikes Partner with regulators on policy reform Change reputation of industry Alcohol in Society: Road safety, underage consumption Building thriving communities: Project SHE 22
Slide 24: Alcohol in society: road safety program
ALCOHOL IN SOCIETY: ROAD SAFETY PROGRAM Expanding regional reach for Road Safety Program Road Safety Week with local universities 23
Slide 25: Building thriving communities
BUILDING THRIVING COMMUNITIES Women empowerment: Health & Sanitation Water replenishment Women Self Help Group who produce and market sanitary napkins Pond excavation work done in Udaipur, Rajasthan increasing the to improve sanitation and create livelihood at Alwar, Rajasthan storing capacity by 41
Slide 26: Our five strategic priorities
OUR FIVE STRATEGIC PRIORITIES To be one of the best performing, most trusted and respected consumer products companies in India 5 Strategic Priorities Strengthen Drive Evolve route to Corporate Winning & accelerate productivity to consumer citizenship organization core brands invest in growth 25
Slide 27: Building a future ready organisation
Winning organization BUILDING A FUTURE READY ORGANISATION Attracting and developing talent Enhancing diversity
Slide 28: Sharing our message on diversity
Winning organization SHARING OUR MESSAGE ON DIVERSITY
Slide 29: Building a future ready organisation
Winning organization BUILDING A FUTURE READY ORGANISATION Attracting and developing talent Enhancing diversity Driving Simplification Building a high performance culture
Slide 30: What we will cover today
WHAT WE WILL COVER TODAY FY19 REVIEW PROGRESS AGAINST STRATEGY F19 FINANCIAL PERFORMANCE CONFIDENCE IN THE FUTURE 29
Slide 31: Sanjeev Churiwala, Executive Director & CFO
SANJEEV CHURIWALA EXECUTIVE DIRECTOR & CHIEF FINANCIAL OFFICER 3 JUNE 201930
Slide 32: F19 in a nutshell
F19 IN A NUTSHELL Net sales +10% Prestige & Above net sales +15% Gross margin 48.8%; +21bps EBITDA margin 14.3%; +175 bps Interest costs ‐18% Profit after tax 659 Cr; +17% * Gross margin for F18 has undergone a change due to a reclassification to maintain conformity – please refer to Annexure in Pre
Slide 33: Net sales grew double-digit, with P&A segment growing faster
NET SALES GREW DOUBLE‐DIGIT, WITH P&A SEGMENT GROWING FASTER Reported net sales up 9.9% 413 8,981 Rs Crore 439 8,170 (41) Underlying* net sales up 10.5% F18 FY Operating model Volume Price/mix F19 FY Reported changes Reported Reported net sales % Underlying* net sales % FY19 FY19 Prestige & Above 15
Slide 34: Underlying volume growth of 5.4%
UNDERLYING* VOLUME GROWTH OF 5.4% Cases, mn Underlying* volume growth 5.4% 84 +11.8% (0.5)% 4.4 (0.2) 81.6 82 80 78.5 (1.1) 78 76 74 F18 FY Operating model Prestige & Above Popular F19 FY Reported changes Reported Reported volume % Underlying volume % Price Mix P&A 11.8 11.8 3.4 Popular (3.1) (0.5)
Slide 35: Consistent progress towards premiumisation
CONSISTENT PROGRESS TOWARDS PREMIUMISATION NET SALES BY SEGMENT (%) FY17 FY18 FY19 40% 35% 32% 58% 63% 66% Prestige & Above Popular * The total doesn’t add up to 100%; the rest is “Other lines of business” 34
Slide 36: EBITDA growth of 25%, EBITDA margin expansion of 175bps
EBITDA GROWTH OF 25%, EBITDA MARGIN EXPANSION OF 175BPS 12.6*% 21bps 9bps 56bps 90bps 14.3% 413 (71) (15) (68) Rs Crore 1,287 1,028 EBITDA margin up 175bps F18 FY Gross profit Marketing Staff costs Other F19 FY Reported spend overheads Reported Underlying EBITDA margin excluding the impact of operat
Slide 37: PAT growth of 17%
PAT GROWTH OF 17% 175bps (146)bps 4bps 82bps (41)bps (30)bps 6.9% 7.3% 260 (111) 48 (36) (54) (9) 659 562 Rs Crore F18 FY EBITDA Other income Depreciation Interest cost Exceptional Tax F19 FY Reported saving items Reported 36
Slide 38: Further deleveraging balance sheet
FURTHER DELEVERAGING BALANCE SHEET Net debt Interest Reduction of Rs. 676 Cr. Interest cost saving of Rs. 48Cr. 7.3% 7.6% Rs Crore 3,265 Rs Crore 268 220 2,589 F18 FY F19 FY F18 FY F19 FY 37
Slide 39: Continued focus on cash management
CONTINUED FOCUS ON CASH MANAGEMENT Rs. Crore 59 34 (27) (169) 321 (220) 86 (676) 1,287 (756) 112 51 Opening EBITDA Sale Working Other Sale of Investment Capex Interest Loan Tax paid Closing cash proceeds capital income subsidiary in expense repayment cash F18 of non movement (FSWL) subsidiary (gross
Slide 40: Further improvement in key financial indicators
FURTHER IMPROVEMENT IN KEY FINANCIAL INDICATORS Return on Capital Employed Debt‐Equity ratio Interest Coverage ratio 6 22% 2.1 19% 4 18% 1.3 3 0.8 F17 F18 F19 F17 F18 F19 F17 F18 F19 39
Slide 41: Creating value for our shareholders
CREATING VALUE FOR OUR SHAREHOLDERS EPS Rs/share Up 440% 9.1 7.7 # 2.3 1.7 F16 FY F17 FY F18 FY F19 FY * EPS has been retrospectively adjusted for the 1:5 stock split that became effective in F19 40
Slide 42: What we will cover today
WHAT WE WILL COVER TODAY FY19 REVIEW PROGRESS AGAINST STRATEGY F19 FINANCIAL PERFORMANCE CONFIDENCE IN THE FUTURE 41
Slide 43: Evolution of consumer landscape
EVOLUTION OF CONSUMER LANDSCAPE 2018: 7th largest economy 2030: 3rd largest economy (GDP Rs.190 lakh crores) (GDP Rs.700 lakh crores) 2005 2018 2030 Affluent Households by annual income (>Rs. 25 lakhs) 1% 3% 7% 7% 21% 44% Middle (Rs.2.5‐25 lakhs) 23% 33% 34% Aspiring 15% 69% 43% (<Rs.2.5 lakhs) # of
Slide 44: Growing per capita consumption and premiumization
GROWING PER CAPITA CONSUMPTION AND PREMIUMIZATION Alcohol consumption vs per capita income Spirits net sales (CAGR) Per capita consumption (liters of pure alcohol) +7% 17% Premium+ 9% Prestige India 2030 India Upper range 2023 Lower range Popular 1% 2017 2022 Per capita income ($) Source: David Turt
Slide 45: Consistent delivery across P&L
CONSISTENT DELIVERY ACROSS P&L Gross margin PAT margin 48.6% 48.8% 7.3% 6.9% 42.9% EBITDA margin 2.0% 14.3% F17 F18 F19 F17 F18 F19 12.6% 11.4% A&P (% of sales) EPS (Rs/share) 9.1 7.7 F17 F18 F19 9.6% 9.6% 7.8% 2.3 F17 F18 F19 F17 F18 F19 * Gross margin for F18 has undergone a change due to a reclas
Slide 46: Confidence in the future
CONFIDENCE IN THE FUTURE India continues to present an attractive market opportunity Consistent progress on our strategic priorities Transforming business to harness the future Medium Term Goal Grow topline by double digit and improve EBITDA margin to mid‐high teens 45
Slide 47: Thank you
THANK YOU