Scandinavian Tobacco Group A/s · OMXCOP:STG
Scandinavian Tobacco Group A/s — Q3 2019 Earnings Presentation
28 slides from Scandinavian Tobacco Group A/s's earnings presentation, Nov 14, 2019
Slide 1: Investor Presentation Third Quarter 2019
INVESTOR PRESENTATION THIRD QUARTER 2019 14 NOVEMBER 2019
Slide 2: Agenda
AGENDA 1. Quarterly Highlights 2. Royal Agio Cigars and Optimisation of Manufacturing Footprint 3. Divisional updates 4. Financials 5. Guidance 2019 6. Q&A This presentation contains forward-looking statements. All statements other than statements of historical fact included in the presentation are
Slide 3: Quarterly Highlights
QUARTERLY HIGHLIGHTS * Higher decline in net sales • EBITDA on track to Acquisition of Agio meet guidance Cigars • FCF guidance raised to ~DKK 1bn Fuelling the Growth delivers more net savings in 2019 than expected 3
Slide 4: Q3 and 9M 2019 Financial Highlights
Q3 AND 9M 2019 FINANCIAL HIGHLIGHTS Q3 2019 9M 2019 DKK 1,846 million DKK 5,127 million Net sales organic growth -4.5% organic growth -2.4% EBITDA DKK 446 million DKK 1,083 million before special items organic growth 5.4% organic growth 5.8% Free cash flow DKK 503 million DKK 819 million before acqu
Slide 5: Acquisition Royal Agio Cigars
ACQUISITION ROYAL AGIO CIGARS ▪ Leading European producer and distributor of machine-made cigars based in Duizel, The Netherlands. ▪ Family-owned by the Wintermans-family since 1904. ▪ 3,200 employees with production facilities in Belgium, The Netherlands, the Dominican Republic and Sri Lanka. ▪ Str
Slide 6: Selected Numbers
SELECTED NUMBERS ▪ The transaction value is about DKK 1.5 billion (EUR 210 million) ▪ Royal Agio’s net sales in FY 2018 of EUR 133 million was about 1/7 of STG net sales ▪ Royal Agio’ s EBITDA margin was about 13% versus STG’ s margin of 19.4% ▪ Since 2010, STG have invested approximately EUR 470 mi
Slide 7: Fuelling the Growth Update
FUELLING THE GROWTH UPDATE ORGANISATION COMMERCIAL RESOURCES • FTE/net sales ratio • Four divisions anchored in Executive Board • Organisational layers from 10 to 7 • Customer service level • 100-120 white collar positions • Market shares in selected markets • Number of active customers in online/ca
Slide 8: Manufacturing Footprint 2016-2020
MANUFACTURING FOOTPRINT 2016-2020 Denmark (2 in Holstebro) Fine-cut tobacco and expanded fine cut and cigar The Netherlands (Eersel) filler tobacco Cigars Belgium (Lummen) Cigars X Denmark (Nykøbing) Cigars United States (Tucker) X Fine-cut tobacco, pipe tobacco and machine-made cigars X Belgium (Wu
Slide 9: Regulation Update
REGULATION UPDATE • FDA • Excise and tax • Tobacco Products Directive • Excise and tax 9
Slide 10: North America Online & Retail
NORTH AMERICA ONLINE & RETAIL DKK million Q3 19 Q3 18 9M 19 9M 18 2018 excl IFRS 16 excl IFRS 16 excl IFRS 16 Net sales 648 626 1,803 1,534 2,111 Gross profit 246 238 687 572 793 EBITDA 113 103 274 219 310 Net sales growth 3.5% 54.9% 17.6% 36.6% 40.7% 1) - Organic growth -1.2% 5.5% 0.7% 8.0% 6.3% Gr
Slide 11: North America Branded
NORTH AMERICA BRANDED DKK million Q3 19 Q3 18 9M 19 9M 18 2018 excl IFRS 16 excl IFRS 16 excl IFRS 16 Net sales 341 368 913 952 1,247 Gross profit 191 210 517 548 712 EBITDA 80 66 196 176 242 Net sales growth -7.4% 1.2% -4.1% -7.1% -7.5% 1) - Organic growth -11.4% 4.3% -8.4% 1.1% -1.2% Gross margin
Slide 12: Region Machine-Made Cigars
REGION MACHINE-MADE CIGARS DKK million Q3 2019 Q3 18 9M 19 9M 18 2018 excl IFRS 16 excl IFRS 16 excl IFRS 16 Net sales 436 446 1,217 1,240 1,682 Gross profit 231 233 626 635 832 EBITDA 109 105 272 242 304 Net sales growth -2.3% -8.8% -1.9% -6.0% -6.4% 1) - Organic growth -2.3% -8.8% -2.1% -6.0% -6.4
Slide 13: Region Smoking Tobacco & Accessories
REGION SMOKING TOBACCO & ACCESSORIES DKK million Q3 2019 Q3 18 9M 19 9M 18 2018 excl IFRS 16 excl IFRS 16 excl IFRS 16 Net sales 421 447 1,194 1,227 1,677 Gross profit 231 236 627 627 882 EBITDA 156 147 399 381 545 Net sales growth -5.8% -3.7% -2.6% -6.1% -7.7% - Organic growth 1) -5.6% 6.3% -2.5% 4
Slide 14: Key Data
KEY DATA Q3 2019 AND 9M 2019 Q3 2018 9M 2018 Q3 2019 Growth, % 9M 2019 Growth, % ex IFRS 16 ex IFRS 16 DKKm DKKm Reported Organic1 DKKm DKKm Reported Organic1 Net sales 1,846 1,887 (2%) (4.5%) 5,127 4,952 4% (2.4%) Gross profit before special items 899 916 (2%) 2,457 2,382 3% Gross margin before spe
Slide 15: Capital Structure and Dividends
CAPITAL STRUCTURE AND DIVIDENDS 15
Slide 16: Guidance 2019
GUIDANCE 2019 GUIDANCE EBITDA Organic growth >5% FREE CASH FLOW ~DKK 1 billion (previously >DKK 750 million) BEFORE ACQUISITIONS ASSUMPTIONS FINANCIAL EXPENSES 1) DKK 70-80 million EFFECTIVE TAX RATE 21-23% SPECIAL ITEMS, NET ~DKK -200 million EXCHANGE RATES Current exchange rates 1) Finincial expen
Slide 17: Scandinavian Tobacco Group
SCANDINAVIAN TOBACCO GROUP
Slide 18: Investor Relations Contact, Financial Calendar
INVESTOR RELATIONS CONTACT FINANCIAL CALENDAR Scandinavian Tobacco Group A/S 2020 Sydmarken 42 2860 Søborg 27 Annual report 2019* Denmark FEB www.st-group.com 2020 26 Annual General Meeting MAR 2020 20 2020* First quarter 2019* MAY 2020 28 Half year report 2020* AUG Torben Sand 2020 Head of Investor
Slide 19: Market Share Performance
MARKET SHARE PERFORMANCE FY 2016 – Q3 2019 Top 5 EU Markets: France, Belgium, Netherlands, UK and Spain 19
Slide 20: Key Data
KEY DATA Q3 2019 Q3 2018 9M 2019 9M 2018 FY 2018 ex. IFRS 16 ex. IFRS 16 ex. IFRS 16 DKKm DKKm Growth, % DKKm DKKm Growth, % DKKm Organic1 Organic1 Net sales 1,846 1,887 (2%) (4.5%) 5,127 4,952 4% -2.4% 6,718 Gross profit (before special items) 899 916 (2%) 2,457 2,382 3% 3,219 OPEX (ex other income
Slide 21: Cash Flow Development
CASH FLOW DEVELOPMENT Q3 2019 Q3 2018 9M 2019 9M 2018 FY 2018 DKKm DKKm DKKm DKKm DKKm EBITDA before special items 446 398 1,083 942 1,304 Changes in working capital 113 17 21 -129 -101 Adjustments 13 -17 23 -36 -81 Special items, paid -40 -14 -130 -36 -103 Cash flow from operating activities before
Slide 22: IFRS 16 – Material Impact on Results
IFRS 16 – MATERIAL IMPACT ON RESULTS IFRS 16 IMPACT ON DIVISIONAL FIGURES, Q3 2019 North Group America North costs / Online & America Region Region not DKK million Retail Branded MMC ST&A allocated Total EBITDA before special items 113 80 109 156 -12 446 IFRS 16 impact -5 -6 -7 -2 -1 -22 EBITDA befo
Slide 23: Special Items
SPECIAL ITEMS SPECIFICATION DKK million Announced 2018 "2019-2021" Guidance Guidance Total Actual Rest 2019 "old" 2019 "new" Thompson ~60 33 ~27 ~27 ~27 Fuelling the Growth up to 250 182 up to 68 ~60 ~35 Agio Transaction Costs ~20 ~20 ~20 Tucker Factory, US ~120 ~120 ~120 ~120 Actual 2018 216 Guidan
Slide 24: North America Online & Retail
NORTH AMERICA ONLINE & RETAIL 24
Slide 25: North America Branded
SCANDINAVIAN TOBACCO GROUP § NORTH AMERICA BRANDED Share of Group Full year 2018 Net sales Gross profit EBITDA 35% 30% 25% 20% 15% 10% 5% 0% Divisional net sales by product category Full year 2018 Accessories & CMA Smoking tobacco Handmade cigars Machine-made cigars
Slide 26: Region Machine-Made Cigars
REGION MACHINE-MADE CIGARS 26
Slide 27: Region Smoking Tobacco & Accessories
REGION SMOKING TOBACCO & ACCESSORIES 27
Slide 28: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements. All statements other than statements of historical fact included in the presentation are forward-looking statements. Forward-looking statements give Scandinavian Tobacco Groups (“STG”) current expectations and projecti
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