Arcus ASA — Q3 2018 Earnings Presentation
24 slides from Arcus ASA's earnings presentation, Nov 16, 2018
Slide 1: Third quarter results 2018
Third quarter results 2018 Kenneth Hamnes, Group CEO Sigmund Toth, CFO 16 November 2018
Slide 2: Q3: Continued revenue growth for Wine and Distribution
Q3: Continued revenue growth for Wine and Distribution Amounts in NOK million 2017 2018 Operating Revenues EBITDA (adj.) +6.9% RG1 +5.4% OG2 603 645 101,6 76,8 Q3 Q3 • Wine: Revenue growth, negative FX-effect • Spirits: Flat revenue, lower margins • Distribution: Increased revenue and higher volume
Slide 3: Q3: Organic growth driven by Wine and Distribution
Q3: Organic growth driven by Wine and Distribution Organic growth1 overall and by reporting segment Percent Q3 Sep YTD Arcus ASA 5.4% Arcus ASA 5.2% Wine 8.1% Wine 8.2% Spirits2 -2.5% Spirits2 -3.3% Distribution 7.0% Distribution 9.3% 1Reported growth adjusted for currency translation effects and st
Slide 4: Q3 Wine: Stronger portfolios, increased market shares in SE and NO
Q3 Wine: Stronger portfolios, increased market shares in SE and NO Amounts in NOK million 2017 2018 Operating revenues EBITDA (adj.) EBITDA (adj.) margin (%) +8.1% OG1 377 394 60,8 16.1 51,8 13.2 Q3 Q3 Q3 • Sweden: Portfolio well positioned to growing categories, but FX reduced EBITDA (adj.) • Norwa
Slide 5: Q3 Spirits: Flat revenue, weak mix reduces margins
Q3 Spirits: Flat revenue, weak mix reduces margins Amounts in NOK million 2017 2018 Operating revenues1 EBITDA (adj.) EBITDA (adj.) margin (%) -2.5% OG2 207 209 38,0 18.4 25,5 12.2 Q3 Q3 Q3 • Norway and Sweden: Strong price competition in the value segments of aquavit and vodka • Denmark: Aquavit ma
Slide 6: Q3 Distribution: Increased revenue, low efficiency
Q3 Distribution: Increased revenue, low efficiency Amounts in NOK million 2017 2018 Operating revenues EBITDA (adj.) EBITDA (adj.) margin (%) +7.0% OG1 73 3,8 5.5 68 2,5 3.4 Q3 Q3 Q3 • Volume increased by 5.7 % vs Q3 ’17, driven by increased activity for existing customers • Share of volume delivery
Slide 7: Financial performance
Financial performance Sigmund Toth, CFO 7
Slide 8: Q3 Group P&L: Increased revenues
Q3 Group P&L: Increased revenues Amounts in NOK million Profit and Loss Q3-18 Q3-17 YTD-18 YTD-17 Operating revenues 644,9 603,1 1 875,1 1 743,9 EBITDA (adj.) 76,8 101,6 160,5 193,9 Depreciation, Amortization and Write-downs -12,6 -12,7 -37,4 -39,0 EBIT (adj.) 64,2 88,8 123,1 155,0 Other income and
Slide 9: Organic growth and positive effects from structural changes, negative FX
Organic growth and positive effects from structural changes, negative FX Q3-18 Operating revenue growth Percent; NOK million +6,9% 644,9 +3,8% -2,0% +5,4% 603,0 Operating revenues Organic growth1 FX Structural Changes2 Operating revenues Q3-17 Q3-18 1Reported growth adjusted for currency translation
Slide 10: Negative FX effects both in Q3 and estimated for the full year
Negative FX effects both in Q3 and estimated for the full year Currency rate effects1 (Q3 2018 actuals vs. Q3 2017 actuals) Currency rate effects1 (2018F currency rate3 vs. 2017 actuals) +2,5% Revenues (MNOK) EBITDA (MNOK) +2,7% Revenues (MNOK) EBITDA (MNOK) 9,35 9,58 9,33 9,58 NOK / EUR2 5,2 7,0 1,
Slide 11: Cash flow positively impacted by lower net working capital at end of Q3
Cash flow positively impacted by lower net working capital at end of Q3 Q3-18 Cash Flow from Operations Amounts in NOK million -9 119 -6 115 53 77 EBITDA (adj.) Change in Taxes Other Cash Flow from Cash Flow from working capital operations operations Q3-18 Q3-17 11
Slide 12: Gearing slightly above target at the end of Q3
Gearing slightly above target at the end of Q3 Net Interest Bearing Debt (NIBD) / R12M Adjusted EBITDA by quarter 2,7 2,6 2,4 2,3 Target < 2,5x 2,3 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 12
Slide 13: Kenneth Hamnes, Group CEO
Kenneth Hamnes, Group CEO 13
Slide 14: Spirits actions going forward…
Spirits actions going forward… Organization Sales/marketing Costs Structural Short term actions Stick to plan, continue Relentless Cost cutting, except New agencies from Q4 (2018) to invest in Germany «X-mas focus» volume-driving 18 and Q1 19 (Liviko activities and Proximo) More of the resources Rev
Slide 15: … in more detail for Germany and Denmark
… in more detail for Germany and Denmark • Arcus staff Germany increased from 1 to 3 during 2018 to • New listings in Lidl: Aalborg Taffel, LINIE and Gammel ensure stronger local execution Dansk on-shelf from Q4 18 • Eggers & Franke’s new and bigger spirits sales force 100% • Strong focus on winning
Slide 16: New products in Denmark
New pr in Denmark ew products enma Arcus 8Y BRAASTAD OREME LIQUEUR AU COGNAG
Slide 17: Agreement with Proximo Spirits in the Nordics and DFTR
Agreement with Proximo Spirits in the Nordics and DFTR 17
Slide 18: NEXT Events
NEXT Events sailing around the world live Follow LINIE's 4 months matutation at sea to gain its smootnress, London 13/08 Q&A London 13/08 >» Explore LINIE Check delkious crinke and emooth evens [ice sos uienermaresse |
Slide 19: Condensed statement of income
Condensed statement of income MNOK Third quarter Year to date Full Year Note 2018 2017 2018 2017 2017 Sales 2,9 635,4 593,8 1 839,8 1 710,1 2 530,1 Other revenue 2 9,5 9,3 35,3 33,8 44,9 Total operating revenue 2,9 644,9 603,1 1 875,1 1 743,9 2 575,1 Cost of goods -384,2 -327,8 -1 098,2 -964,3 -1 40
Slide 20: Condensed statement of financial position
Condensed statement of financial position MNOK Year to date Full Year Note 2018 2017 2017 Intangible assets 6 1 838,8 1 757,6 1 891,4 Tangible assets 5 317,8 328,6 329,8 Deferred tax asset 132,7 166,5 136,8 Financial assets 55,7 49,8 60,1 Total fixed assets 2 345,0 2 302,4 2 418,1 Inventories 482,6
Slide 21: Condensed statement of cash flow
Condensed statement of cash flow MNOK Third quarter Year to date Full Year Note 2018 2017 2018 2017 2017 Pre-tax profit 45,9 73,2 90,5 119,0 258,8 Depreciation and amortisations 5,6 12,6 12,7 37,4 39,0 74,3 Received dividend from associated companies 0,0 0,0 0,4 0,0 0,0 Net interest in period 9,5 6,
Slide 22: Historic quarterly distribution of top-/bottom-line
Historic quarterly distribution of top-/bottom-line 2011-2017, average 54% Operating income EBITDA Adj. 32% 24% 24% 25% 20% 18% 3% Q1 Q2 Q3 Q4 Average 2011 – 2017 Arcus ASA, rounded numbers 22
Slide 23: Estimated effects of IFRS 16 are significant, but loan terms unaffected
Estimated effects of IFRS 16 are significant, but loan terms will be calculated according to today’s model, independently of IFRS 16 Amounts in NOK million, ESTIMATES ONLY1 Balance sheet effects P&L effects year one Recognition of asset/debt Equity effect 1.050 – 1.150 ~1.100 depending on 91 91 meth
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