Britvic — FY2013 Earnings Presentation
44 slides from Britvic's earnings presentation, Nov 26, 2013
Slide 1: Britvic plc Preliminary results 26 November 2013
Britvic plc Preliminary results 26 November 2013
Slide 2: Gerald Corbett, Chairman
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Slide 3: Agenda
Agenda Financial performance & guidance John Gibney Progress update on our new strategy Simon Litherland
Slide 4: John Gibney, Chief Financial Officer
John Gibney Chief Financial Officer
Slide 5: Group performance
Group performance +4.4% +18.4% +120bps +27.5% +66.7% £44.4m +4.0% +0.4% 180bps 46.4% 46.7% £29.4m 1.9% Group Group Group EBITA Adjusted Improved Reduction in Full year revenue EBITA margin EPS of FCF net debt to dividend of £1,321.9m £137.9m 10.4% 35.2p £103.5m (£402.3m) 18.4p Adjusted net debt to E
Slide 6: Positive weather impact in Q4 but underlying consumer environment remains challenging
Positive weather impact in Q4 but the underlying consumer environment remains challenging GB • Full year market volume up 1.3%, value up 3.6% • Q4 volume up 7.8%, value up 9.8% France • Full year market volume down 0.2%, value up 0.9% • Q4 syrups volume up 8.1%, value up 10.3% Ireland • Full year ma
Slide 7: GB stills
GB stills 2013 2012 % £’m £’m Change Volume (m. litres) 398.7 402.9 (1.0) ARP per litre (pence) 85.3p 79.8p 6.9 Revenue 340.1 321.7 5.7 Brand contribution 154.5 141.2 9.4 Brand contribution margin 45.4% 43.9% 150bps Strong ARP Fruit Shoot back to and margin growth pre-recall market share Note: All n
Slide 8: Fruit Shoot returns to pre-recall levels
Fruit Shoot returns to pre-recall levels • A strong programme to return Fruit Shoot to its leading position • GB take-home market value share and distribution is back to pre-recall levels • Brand perception measures are strong • “Happy to give to your child” • “Brand you love” • “Worth paying for”
Slide 9: GB carbonates
GB carbonates 2013 2012 % £’m £’m Change Volume (m. litres) 1,153.9 1,154.1 0.0 ARP per litre (pence) 46.5p 44.9p 3.6 Revenue 536.4 517.9 3.6 Brand contribution 200.1 188.7 6.0 Brand contribution margin 37.3% 36.4% 90bps Pepsi held volume and Strong brand gained value market share in contribution gr
Slide 10: International
International 2013 2012 % £’m £’m Change Volume (m. litres) 37.7 38.2 (1.3) ARP per litre (pence) 99.5p 76.8p 29.6 Revenue 37.5 29.3 28.0 Brand contribution 14.1 8.3 69.9 Brand contribution margin 37.6% 28.3% 930bps Fruit Shoot performing ahead of Fruit Shoot available in 32 US pre- recall levels in
Slide 11: Ireland
Ireland % Change 2013 2012 % constant £’m £’m Change currency Volume (m. litres) 199.0 201.3 (1.1) (1.1) ARP per litre (pence) 56.8p 54.3p 4.6 2.3 Revenue 136.9 138.7 (1.3) (3.5) Brand contribution 49.0 44.6 9.9 7.2 Brand contribution margin 35.8% 32.2% 360bps 360bps Management action Market conditi
Slide 12: France
France % Change 2013 2012 % constant £’m £’m Change currency Volume (m. litres) 277.6 278.3 (0.3) (0.3) ARP per litre (pence) 97.6p 89.4p 9.2 6.4 Revenue 271.0 248.8 8.9 6.2 Brand contribution 67.9 59.2 14.7 11.5 Brand contribution margin 25.1% 23.8% 130bps 120bps Branded syrups portfolio Fruit Shoo
Slide 13: A&P and fixed costs
A&P and fixed costs 2013 2012 % £’m £’m Change Total A&P spend 70.3 62.5 (12.5) A&P as a % of revenue 5.4% 5.1% 30bps Non-brand A&P 7.3 7.8 6.4 Fixed supply chain 100.7 100.3 (0.4) Selling costs 124.5 118.0 (5.5) Overheads & other 118.1 103.2 (14.4) TOTAL FIXED COSTS 350.6 329.3 (6.5) Overheads up d
Slide 14: EBIT to earnings
EBIT to earnings % Change 2013 2012 constant £’m £’m currency EBIT 135.0 112.7 18.8 Interest (26.9) (28.3) 4.9 Profit before tax 108.1 84.4 26.7 Tax (25.5) (21.5) (18.6) Effective tax rate 23.6% 25.5% 190bps Profit after tax 82.6 62.9 29.5 Debt reduction results Earnings growth of in lower interest
Slide 15: Cash flow
Cash flow 2013 2012 % £’m £’m Change EBIT 135.0 112.7 19.8 Depreciation & amortisation 47.5 45.4 4.6 EBITDA 182.5 158.1 15.4 Working capital (6.2) 2.7 (329.6) Capital expenditure (34.9) (46.7) 25.3 Pension contributions (14.0) (10.8) (29.6) Other (23.9) (41.2) 42.0 Underlying free cash flow 103.5 62
Slide 16: Exceptional and other items
Exceptional and other items P&L £’m Cash items Corporate exceptional items related to the aborted merger with A.G.Barr 9.6 Corporate exceptional items relating to the implementation of strategic initiatives 10.6 Total cash items 20.2 Non cash items Factory closure write-offs 12.9 Other fair value mo
Slide 17: 2014 Guidance
2014 Guidance • Expected EBIT range of £148m to £156m, modelling consideration: • One-off £8m Fruit Shoot recall related costs in 2013 • Net £8m benefit from strategic initiatives in 2014 • 2013 one-off weather benefit of £4m to £5m • Anticipate low single digit raw material inflation, with benign c
Slide 18: 2014 Guidance
2014 Guidance • Expected EBIT range of £148m to £156m, modelling consideration: • One-off £8m Fruit Shoot recall related costs in 2013 • Net £8m benefit from strategic initiatives in 2014 • 2013 one-off weather benefit of £4m to £5m • Anticipate low single digit raw material inflation, with benign c
Slide 19: Summary
Summary A strong financial performance for the full year Margin and pricing growth in every business unit Increased cash generation and reduction in net debt Platform for strong future earnings growth
Slide 20: Simon Litherland, Chief Executive
Simon Litherland Chief Executive
Slide 21: A strong performance in 2013
A strong performance in 2013 • A positive financial performance – earnings and cash • Gained market value share in all of our business units • Fruit Shoot above pre-recall levels in all markets • Strong H2 performance whilst implementing our significant change programme • Good progress across all ou
Slide 22: Progress against our new strategy
Progress against our new strategy
Slide 23: Britvic has the potential to become one of the world's most admired soft drinks businesses
Britvic has the potential to become one of the world’s most admired soft drinks businesses • Becoming the benchmark integrated branded soft drinks business for both PepsiCo and our own brands in GB & Ireland • Fully exploiting global category opportunities in Kids, Family and Adult • Creating a simp
Slide 24: A new operating model to enable simplicity, focus and accountability
A new operating model to enable simplicity, focus and accountability Resources aligned Simpler organisation with More efficient and to strategy and clear accountabilities lower cost growth opportunities • A new executive team in place, with clearly defined accountabilities • Consolidating GB & Irela
Slide 25: Our new executive team
Our new executive team CEO GB Managing Ireland International France Chief HR & IT General Strategic Director Commercial Managing Managing Financial Director Counsel Marketing Paul Graham Director Director Director Officer Doug Frost Clare Thomas Director Kevin Donnelly Simon Stewart Jean-Luc Tivolle
Slide 26: Four transformational initiatives to step change the cost base and profitability
Four transformational initiatives to step change the cost base and profitability 1. Increase operational leverage through fewer manufacturing sites 2. Fundamentally change the Irish operating model 3. Transform our procurement and product optimisation initiatives 4. Implement a commercial change pro
Slide 27: 1. Increase operational leverage through fewer manufacturing sites
1. Increase operational leverage through fewer manufacturing sites • Production at Chelmsford and Huddersfield sites to end by March 2014, as planned • Fruit Shoot line transferring to France, production commences spring 2014 • Leeds factory lines upgrade to accommodate Chelmsford J20 production • B
Slide 28: 1. Increase operational leverage through fewer manufacturing sites
1. Increase operational leverage through fewer manufacturing sites • Production at Chelmsford and Huddersfield sites to end by March 2014, as planned • Fruit Shoot line transferring to France, production commences spring 2014 • Leeds factory lines upgrade to accommodate Chelmsford J20 production • B
Slide 29: 2. Fundamentally change the Irish operating model
2. Fundamentally change the Irish operating model • Senior leadership teams for GB & Ireland appointed • In-market commercial focus maintained • Support functions have a GB&I responsibility • Belfast warehouse and Thurles call centre closed on schedule • Ballygowan factory utilisation significantly
Slide 30: 3. Transform our procurement and product optimisation initiatives
3. Transform our procurement and product optimisation initiatives Consolidated supplier base Cost reduction Leveraging group wide scale Strategic sourcing programme Greater forward Increased investment in people, visibility of costs systems and insight Increased agility by developing Improved supply
Slide 31: 3. Transform our procurement and product optimisation initiatives
3. Transform our procurement and product optimisation initiatives Consolidated supplier base Cost reduction Leveraging group wide scale Strategic sourcing programme Greater forward Increased investment in people, visibility of costs systems and insight Increased agility by developing Improved supply
Slide 32: 4. Implement a GB commercial change programme
4. Implement a GB commercial change programme Optimise revenue through A balanced approach to Increased A&P disciplined customer and volume and value growth spend over time promotional investment Resource focused on Move from three to Improving our key direct customers and two sales channels end‐out
Slide 33: Maximising the international opportunity
Maximising the international opportunity
Slide 34: Significant progress in the US
Significant progress in the US • Long-term agreement in place with PepsiCo Americas Beverages (wholly owned Pepsi bottler) • Distribution extended to a further 9 states, taking the total to 41 • Commissioning of a second manufacturing production facility by PAB • Secures Fruit Shoot’s position and f
Slide 35: Driving category growth, distribution and awareness
Driving category growth, distribution and awareness • Gaining market share gains and growing kids single-serve category • Volume share of c25% (Great Lakes) and c20% (Mid-Atlantic) regions. • Accelerating distribution, now available in c60,000 outlets • New listings secured e.g. Kroger grocery chain
Slide 36: Building momentum in Europe
Building momentum in Europe • In Spain listings secured in 4 of the 6 major grocery retailers • Regional chain listings also secured and over 7,000 Convenience & Impulse outlets listed • Children’s TV & digital marketing campaigns • In the Netherlands retail sales has exceeded €10m • New multivitami
Slide 37: Good progress in India
Good progress in India • In-market General Manager appointed • Market specific packs and flavours developed • Strong progress establishing supply chain • On track for mid-2014 launch • Major consumer campaign targeting the emerging affluent consumer, in time for Diwali • Focus on major urban conurba
Slide 38: 2014 - Compelling brand plans and innovation
2014 - Compelling brand plans and innovation
Slide 39: Leveraging our category leading portfolio
Leveraging our category leading portfolio Kids Family Adult • First ever multi-market • Increased year round • Continue limited edition strategy campaigns for Fruit Shoot investment on our leading on J2O • Partnership with Angry birds – dilutables brands in each • New packs and occasion solutions wo
Slide 40: Leveraging our category leading portfolio
Leveraging our category leading portfolio Kids Family Adult • First ever multi-market • Increased year round • Continue limited edition strategy campaigns for Fruit Shoot investment on our leading on J2O • Partnership with Angry birds – dilutables brands in each • New packs and occasion solutions wo
Slide 41: Leveraging the PepsiCo portfolio
Leveraging the PepsiCo portfolio Great Brand Collateral Innovation Power of One • Winning cola and No Sugar • Build on success of Mountain • Access to global marketing ‘Switchers’ by leading on Pepsi Max Dew with “sugar free” and “AMP” properties • Maintain undisputed Tea • Bringing excitement and v
Slide 42: Robinsons innovation to unlock sustainable value growth
Robinsons innovation to unlock sustainable value growth • Squash has high penetration but is constrained by traditional habits • Kids drink the most squash • Consumption is predominantly at home • As you get older the category becomes less relevant • Opportunity to drive category growth • Unlock the
Slide 43: Introducing SQUASH'D
Introducing “SQUASH’D” • Ultra concentrated squash • 20 servings from a 66ml pack • Three great flavours • Apple & Blackcurrant, Summer Fruits and Orange & Peach flavours • Marketing campaign to drive trial and awareness • Launching spring 2014
Slide 44: Summary
Summary A much improved performance in 2013 Good progress on implementing the strategy and initiatives On track to deliver £30m savings by 2016 International opportunities are gaining momentum