East African Breweries Plc · NSEKE:EABL
East African Breweries — FY2016 Earnings Presentation
34 slides from East African Breweries's earnings presentation, 2016
Slide 1: Full Year Results 2016
CELEBRATING LIFE, EVERY DAY, EVERYWHERE FULL YEAR RESULTS 2016 YEAR ENDED JUNE 2016 1 Highly Confidential
Slide 2: Full Year Results Briefing
F16 Commercial Review Charles Ireland FULL YEAR RESULTS F16 Financial Performance BRIEFING Gyuri Geiszl F17 Priorities Andrew Cowan Q&A 2 Highly Confidential
Slide 3: F16 Full Year Review
F16 FULL YEAR REVIEW Charles Ireland Group Managing Director 3 Highly Confidential
Slide 4: We are clear on our ambition
We are clear on To create the best our ambition performing, most trusted and respected consumer products company in Africa Strengthen and accelerate our premium core brands Win in reserve in every market Innovate at scale to meet new consumer needs Build and then constantly extend our advant
Slide 5: Moving in the right direction whilst overcoming short term challenges
Moving in the right direction whilst overcoming short term challenges Volumes up +25%, net sales up +12% on constant currency basis Loss of South Sudan business, excise increases and FX result in flat headline net sales Costs reduction and robust cash delivery Disposal of non-core assets 5 Highly Co
Slide 6: Solid performance in a volatile environment
Solid performance in a volatile environment vs LY Volume +25% Net Sales 0% Gross Profit +1% Profit for the Year +7% Cash Flow from Operations +32% Total Dividend KES 12/share 6 Highly Confidential
Slide 7: With the exception of South Sudan – all markets in organic growth
With the exception of South Sudan– all markets in organic growth Contribution Net Sales Net Sales to Overall Growth Growth (local Key Brands EABL (KES) currency) KENYA 71% +16% +16% UGANDA 16% -11% +5% TANZANIA 10% -3% +12% EABLi 3% -80% n/a Total EABL 100% 0% +12% 7 Highly Confidential
Slide 8: Five out of eight segments in growth
Five out of eight segments in growth…. Premium RTDs Mainstream Emerging +2% +3% -6% +112% Beer & RTDs Reserve Premium Mainstream Emerging +22% -9% +22% -2 % Spirits 8 Highly Confidential
Slide 9: Innovation contribution is increasing
Innovation contribution is increasing KENYA UGANDA TANZANIA https://www.google.com/search?q=ngule&biw=1600&bih=805&tbm=isch&imgil=C qGSrOegBM%253A%253Bt5EBnjBMeUT- BM%253Bhttps%25253A%25252F%25252Fugandabreweries.com%25252Fbee 2%25252Fngule- button%25252F&source=iu&pf=m&fir=CKGk0qGSrOegBM%253A%252Ct
Slide 10: Kenya: Growth driven by Senator and Spirits
Kenya Growth driven by Senator +16% and Spirits Excluding Senator net sales Tusker “Twende Rio” +4.5% campaign well received, Senator has more than Tusker Gold growing tripled KC Coconut +43% Excise increase on driving Beer and +46% on Spirits in Dec 2015 deteriorated H2 innovation performance
Slide 11: Uganda: Accelerating growth in a difficult environment
Uganda Accelerating growth in a +5%* difficult environment Innovation driven Double digit growth of by the new Ngule Tusker Lite Beer Strong Premium Spirits performance New pack for Uganda Robust Reserve Waragi performance Weakness from Bell Bell Lager pack Lager refreshed 11 * Net sales gro
Slide 12: Tanzania: Strong growth driven by Pilsner
Tanzania Strong growth driven +12%* by Pilsner Pilsner growth at Strong performance of double digits Pilsner Decline in premium Beer Developing RTC Strong performance of Reserve Smirnoff Black Ice brands rapid growth 12 * Net sales growth in local currency Highly Confidential
Slide 13: EABLi: Growth in Rwanda, volatility in South Sudan
Growth in Rwanda, EABLi volatility in South Sudan Currency challenges Strong Growth in Rwanda $ Tough East DRC market Political instability in South Sudan and Burundi South Sudanese Pound depreciation 13 Highly Confidential
Slide 14: Extending our advantage in Route to Consumer
Extending our advantage in Route to Consumer delivering deeper and sustainable availability Uplifted standards for our distributors delivering 3 Gold distributors in Kenya Expanded our outlet universe and continued to increase number of outlets called directly Continued to uplift our commercia
Slide 15: Sustainability: Creating shared value through positive social & economic contribution
Sustainability: Creating shared value through positive social & economic contribution Sustainable Sourcing Partnership with government on a Driving Local Raw Material structured sorghum supply chain resourcing added programme +30,000 sorghum farmers in Kenya 33,000 People benefit from EABL Found
Slide 16: We continue to invest in our people to guarantee our ambition
We continue to invest in our people to guarantee our ambition Deloitte Employer of Choice Best awards: #1Runners Up in Company to Africa Work for Survey Top 3 in Kenya : Deloitte Best Company to Work For Survey Awarded #2 best employer in Uganda by the Federation of Uganda Employers Amazing
Slide 17: Many successes across the year: F16 Highlights
Many successes across the year F16 Highlights Strong performance of Senator in Kenya, Pilsner in Tanzania, and Ngule in Uganda Big momentum on Spirits Innovations contribution – Ngule Lager, KC Coconut and Chrome Vodka Cultural transformation embedment: Focus; Delivery; Improvement; Teamwork
Slide 18: Thank You
Thank You Please hold the questions to the end 18 Highly Confidential
Slide 19: F16 Financial Performance
F16 FINANCIAL PERFORMANCE Gyuri Geiszl Group Finance Director 19 Highly Confidential
Slide 20: Key Highlights
Key Highlights F16 vs LY Volume +25% Net sales KES 64.3bn 0% Operating profit KES 16.9bn -7% Profit after tax - continuing operations KES 8.0bn -16% Profit after tax KES 10.3bn +7% Cash from operating activities KES 27.9bn +32% Total dividend KES 12.0/Share +60% 20 Highly Confidential
Slide 21: Strong volume growth offset by excise increase, FX and negative mix
Strong volume growth offset by excise increase, FX and negative mix F16 F15 vs LY KES bn KES bn Excise duties as a percentage Volume (M EU) 11.2 8.9 +25% of gross sales up to 44.5% from 36.2% despite Senator Gross sales 115.9 101.0 +15% benefit Excise duties (51.6) (36.5) +41% Net sales 64.3 64.4
Slide 22: Senator growth offset by FX and South Sudan
Senator growth offset by FX and South Sudan Senator keg in Kenya more than trebled Volume down in South Sudan by 60% Uganda and Tanzania shilling weakening against Kenya shilling causing negative translation FX impact 22 Highly Confidential
Slide 23: Cost of sales down due to mix and efficiencies
Cost of sales down due to mix and efficiencies F16 F15 vs LY KES bn KES bn COGS decline driven by Senator growth Volume (M EU) 11.2 8.9 +25% Senator Gross Margin Gross sales 115.9 101.0 +15% improved significantly as a result of better fixed cost Excise duties (51.6) (36.5) +41% absorption COG
Slide 24: Increased operational costs impacted the operating profit
Increased operational costs impacted the operating profit F16 F15 Staff Costs reflecting vs LY annual inflation and KES bn KES bn incentives review Gross profit 32.2 32.0 +1% Advertising and promotion investment Selling & distribution (6.1) (6.0) +0% growth offset by procurement savings Staff co
Slide 25: Substantial reduction in net debt and finance charges
Substantial reduction in net debt and finance charges Borrowings decreased by F16 F15 KES 7.2bn, net borrowings vs LY KES ’bn’ KES ’bn’ by KES 5.4bn Settlement of long term debt of KES 8bn Net borrowings (26.6) (31.0) -17% Net finance costs decreased by 0.8bn due to lower net debt and rebasing
Slide 26: Higher tax charge reduces impact of sale on bottom line
Higher tax charge reduces impact of sale on bottom line F16 F15 KES KES vs LY ’bn’ ’bn’ Income tax expense Operating profit 16.9 18.2 -7% includes provision 1.0bn for tax audits and Finance costs, net (3.3) (4.1) -20% exposures Profit before tax 13.6 14.2 -4% Income tax expense (5.6) (4.6) +21% Pr
Slide 27: Cash from operating activities increased by 32%
Cash from operating activities increased by 32% F16 F15 vs % KES ’bn’ KES ’bn’ LY Significant improvements in working capital Operating profit 13.7 14.1 (0.5) -4% management Depreciation and 5.7 6.1 0.4 Improved planning process amortization and forecasting accuracy Working capital movements 8.5
Slide 28: We continue to invest in our future growth
We continue to invest in our future growth CAPEX Total F16 investment of KES 5bn • Returnable packaging and new keg barrels • Non-tamper nip caps to support fight spirits counterfeits • In Uganda effluent treatment plant upgrade in line with our commitment to clean environment • Coolers to improve
Slide 29: Dividends
Dividends F16 F15 Dividends KES/Share KES/Share Interim 2.0 1.5 Final (Proposed) 5.5 6.0 7.5 7.5 Special 4.5 - Total 12.0 7.5 29 Highly Confidential
Slide 30: Thank You
Thank You Please hold the questions to the end 30 Highly Confidential
Slide 31: F17 Priorities
F17 PRIORITIES Andrew Cowan Group Managing Director 31 Highly Confidential
Slide 32: Focus areas for F17
Focus areas for F17 Opportunities for further growth Continue to invest behind Innovation Grow Mainstream Beer Leverage on Mainstream Spirits momentum Finalise investment in production capacity for growth Sustainable productivity focus to invest in growth 32 Highly Confidential
Slide 33: Q & A Session
Q & A Session 33 Highly Confidential
Slide 34: 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 fo
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