Savola Group · TADAWUL:2050
Savola — Investor Presentation (November 2013)
71 slides from Savola's investor presentation, November 2013
Slide 1: Focusing, Delivering
FOCUSING Delivering
Slide 2: Agenda
Agenda… 1 2 3 4 Overview Our Businesses: Financials Intangibles Current Position & Future Direction
Slide 3: History – Key Development Stages
History – Key Development Stages • Started Jeddah • Entered oil business in • Established with • Entered sugar Plastics factory Iran (Acquisition), a paid up capital refining • Acquired 40% stake in Morocco (Greenfield), of SR 40m business in KSA Almarai Sudan (Greenfield), Kazakhstan (Acquisition)
Slide 4: History – Key Development Stages
History – Key Development Stages • Started sugar and oil commercial • Acquired Pasta business in Egypt, • Issued Sukuk worth SAR 1.5 bln, production in Egypt and Algeria, resp. the largest acquisition made by first tranche of SAR 5 bln program • Acquired oil business in Turkey Savola Foods • Acquisi
Slide 5: History – Key Development Stages
History – Key Development Stages Today Savola Group is one of the top Food, Retail and Plastics Packaging player in the MENA region with leading brands
Slide 6: Key Facts
Key Facts Around 20,000 Net Sales of SAR Employees 27.4 bln in 2012 Countries of Market Operations: 8+ capitalization of SAR 31.5 bln (as of 28th November 2013)
Slide 7: Our Businesses
Our Businesses Foods Retail (Edible Oils, Sugar, Pasta) (Hypermarkets & Supermarkets) Revenue SAR 16.4 bln Revenue SAR 10.2 bln Investments Plastics (Strategic and Non-core) (Rigid & Flexible) Value of over SAR 14 bln Revenue SAR 1.1 bln
Slide 8: Our Businesses – Revenue by Sector
Our Businesses Revenue by Sector Total: SAR 25 bln Total: SAR 27 bln 2011 2012 Foods 36.1% Plastics 36.8% 59.9% Retail 59.4% 3.9% 3.8%
Slide 9: Our Key Strengths
Our Key Strengths Broad and diversified geographic footprint and product offering Extensive consumer and Market leader in high market understanding growth and fragmented markets Resilient business model Excellent brand awareness based on stable revenue in all markets that Savola is generation by ser
Slide 10: Our Goals
Our Goals Continue to grow by investing in and Increase profitability focusing on core sectors Maximize total shareholders’ return Give more autonomy to subsidiaries to prepare them for Reallocate cash potential spin-offs invested from non-core investments to core sectors Increase dividends
Slide 11: Our Businesses: Current Position & Future Direction
2 Our Businesses Current Position & Future Direction
Slide 12: Savola Foods
Savola Foods
Slide 13: Oil Value Chain
Oil Value Chain Raw materials Offering Palm oil Refining Packaging B2B/ Export Corn oil Sunflower oil Soya oil B2C Brands and market positions KSA, GCC & Afia, Al Arabi, Shams, Olite, Rawabi, Afia, Ganna, Slite, #1 Egypt #1 Yemen Nakheel, Dalal Helwa Iran #1 Ladan, Aftab, Bahar Turkey #1 Yudum, Sirm
Slide 14: Sugar Value Chain
Sugar Value Chain Raw materials Offering Raw Cane 100% Refining Sugar B2B/ Export Beet B2C Beet sugar plant is Brands and market positions completed and is currently going KSA, GCC & Al Osra, Ziadah, Safaa, Nehar, Halla, Yemen #1 Sweeva through test phase Egypt NA Al Osra
Slide 15: Pasta Value Chain
Pasta Value Chain Raw materials Offering Processing Unbranded 100% Wheat Branded Brands and market positions Egypt #1 Maleka, Italiano
Slide 16: Financial Performance
Financial Performance CAGR Revenue 21% Net income 16% 626 489 399 16,389 234 15,224 12,026 9,337 2009 2010 2011 2012 Revenue (SAR millions) NI (SAR millions)
Slide 17: Revenue Breakdown
Revenue Breakdown SFC Revenue Breakdown by Geography, 2012 (Total: SAR 16.4 bln) 3.7% 1.7% 1.1% KSA 4.1% Egypt 5.4% Iran 37.9% Turkey Algeria 26.8% Sudan Morocco 19.3% Kazakhstan
Slide 18: Volume Breakdown
Volume Breakdown SFC Total Sales Volume by Geography, 2012 (Total: 3.6 mln MT) 1.6% 1.3% 3.1% 0.9% KSA 3.0% Egypt Iran 15.1% Turkey 48.2% Algeria Sudan 26.8% Morocco Kazakhstan
Slide 19: Strategic Growth Drivers
Strategic Growth Drivers 1 Diversification of 2 Leveraging the value product segments of existing brands A regional leader in basic foods across all 3 Organic growth channels 4 Selective upstream integration 5 Strategic M&A Mission is to enrich consumer cooking experience by developing ingredient so
Slide 20: Strategic Growth Drivers
Strategic Growth Drivers 1 Diversification of 2 Leveraging the value product segments of existing brands A regional leader in basic foods across all 3 Organic growth channels 4 Selective upstream integration 5 Strategic M&A Mission is to enrich consumer cooking experience by developing ingredient so
Slide 21: Diversification of product segments
Strategic Growth Drivers 1) Diversification of product segments • Enter into adjacent and complementary new product categories • Targeting new retail and wholesale customers to drive revenue growth and enhance profit margins Consumer Cooking / Baking Experience Cooking / Baking Ingredients Ready-to-
Slide 22: Leveraging the value of existing brands
Strategic Growth Drivers 2) Leveraging the value of existing brands • Enhance economies of scale in marketing and advertising • Facilitate establishing a foothold in new markets KSA Turkey Iran Egypt Others Afia and Ladan have been used as umbrella brands
Slide 23: Organic growth
Strategic Growth Drivers 3) Organic growth • Large population base with high disposable incomes to drive consumption of basic commodities • Exports to neighboring countries Total base for countries where Savola Food operates Population: 394 million Population Growth (2012): 1.5% Edible Oil Con
Slide 24: Strategic Growth Drivers – Country Markets
Strategic Growth Drivers 1 2 3 KSA Egypt Turkey Population: 28.7 mln Population: 84.0 mln Population: 74.5 mln Population Growth (2012): 2.1% Population Growth (2012): 1.8% Population Growth (2012): 1.2% GDP Growth: 6.0% GDP Growth: 1.5% GDP Growth: 2.3% Edible Oil Consumption: 6
Slide 25: Export potential to neighbouring countries
Strategic Growth Drivers Example: Iraq Oils & Fats Volume Export potential to neighbouring countries (in „000 Tons) +3% CAGR For example Iraq 515 530 546 Fragmented market with no sophisticated player 25% 25% 25% Ghee +3% Proximity to Jeddah plant 75% 75% 75% Oil +3% Brand awareness of Afia
Slide 26: Selective upstream integration
Strategic Growth Drivers 4) Selective upstream integration Markets Description (% seeds locally produced) Net Local farming larger than local consumption Malaysia (387%) United States (87%) Exporter Government incentives aligned to favor Indonesia (400%) Markets exports Argentina, Brazil
Slide 27: Strategic M&A
Strategic Growth Drivers 5) Strategic M&A Food Categories in GCC Total packaged food Overlapping with Other market Savola / Almarai Categories businesses Total B2C SAR 46 bln market size SAR 80 bln SAR 34 bln Number of Categories 52 28 24 Profit Pool SAR 22 bln SAR 12 bln SAR 10 bln (Gross Profit) F
Slide 28: Azizia Panda United Company
Azizia Panda United Company
Slide 29: Retail Value Chain
Retail Value Chain Super Vendors / 51% Super • Selling area/store: 1,800-2,500 m2 Whole Sale • Sales intensity: SAR 396 /m2 /week • New Capex per store: SAR 8-12 mln Hyper Hyper Distribution • Selling area per store: 3,000-12,000 m2 Center 49% • Sales intensity: SAR 353 /m2 /week • New Capex per sto
Slide 30: Key Facts
Key Facts Present in 33 L2L increase of cities across 6% in 2012 KSA Customer count Customer footfall of over 91 of over 220 million million Present across KSA with exceptional distribution network
Slide 31: Key Facts
Key Facts Customer Count Number of Stores and Selling Area CAGR 14% CAGR Selling Area 23% 497,000 m2 83 Mn 176,000 m2 98 44 Mn 2012 54 48 9 2007 2007 2012 Hypermarkets Supermarkets
Slide 32: Financial Performance
Financial Performance CAGR Revenue 12% Net income 121% 311 200 66 29 10,157 9,182 8,183 7,311 2009 2010 2011 2012 Revenue (SAR millions) NI (SAR millions)
Slide 33: Strategic Growth Drivers
Strategic Growth Drivers 1 2 3 4 5 6 Organic Adapting to State of the Expansion of Expansion of New retail growth the demands art non-food Panda formats of Distribution lines branded customers product lines Our vision is to be the number 1 mass market retailer in the region
Slide 34: Strategic Growth Drivers – Population
Strategic Growth Drivers 2011 Population Total 28.7 mln — Total population is expected to reach 11% 9% 10% 32.8 mln by 2016 23% — 59% of total population is below 30 30% years of age, of which 50% are females 51% 19% 18% 16% 1 48% 41% — 23% more married couples (11.9 mln) 24% by 2020 Organic growth
Slide 35: Grocery Retail Market Size
Strategic Growth Drivers Grocery Retail Market Size SAR bln 148 CAGR 137 128 119 37 7.3% 111 35 104 32 30 26 28 29 11.3% 24 26 19 21 17 1 72 76 81 5.8% 61 64 68 Organic growth 2011 F 2012 P 2013 P 2014 P 2015 P 2016 P Small Grocery & Others Hypermarkets Supermarkets Modern retail share out of the to
Slide 36: Adapting to the demands of customers
Strategic Growth Drivers • Panda ranked # 1 in lowest cost of shopping by offering the best prices to customers and special 2 offers Adapting • It continues to have to the good value for money demands and lowest prices of compared to customers competitors Meeting customers‟ needs is our priority
Slide 37: State of the art distribution
Strategic Growth Drivers • Distribution center (DC) in Riyadh: Largest DC in the region Built up area of around 92,500 m2 Super flat floors 3 • Setting up 2nd DC in KAEC with built up area of over 67,000 m2 State of the art • Second largest fleet size in KSA with Distribution over 380 vehicles
Slide 38: Expansion of non-food lines
Strategic Growth Drivers Panda has formulated a long-term strategy to increase the non-food sales 4 Expansion of non- food lines Increase in non-food sales mix will improve overall margins
Slide 39: Expansion of Panda branded product lines
Strategic Growth Drivers Panda plans to increase the range of “Panda” branded products 5 Expansion of Panda branded product lines Increase in private label sales mix will improve overall margins
Slide 40: New retail formats
Strategic Growth Drivers Modern grocery formats underpenetrated 24% 25% 41% 36% 62% 16% 57% 23% 39% 6 23% 59% New 36% 25% Avg. 19% 24% retail 15% formats UAE Italy Spain UK KSA Small Grocery Retails Hypermarkets Supermarkets Panda entered into convenient store format with the brand name “My Panda”
Slide 41: Savola Packaging Systems
Savola Packaging Systems
Slide 42: Plastics Value Chain
Plastics Value Chain Raw materials Offering Processing PET 80% Flexible Packaging PP 20% PE Rigid Packaging Flexible packaging Food Home Other Rigid Packaging PET bottles HDPE bottles Others
Slide 43: Key Facts
Key Facts Operating 9 Recognized by Factories in 3 SABIC as No. 1 cities across KSA customer in & Egypt Polyethylene One of The Three Ranked 45 Largest Plastics Globally in Rigid Converter In ME * Packaging * Ref. : ARAB PLAST 2013 (Arab International Plastics & Rubber Industry Trade Show and Confer
Slide 44: Key Facts – Volume Sales
Key Facts SPS Volume Sales by Geography, 2012 SPS Volume Growth (Total: 123,000 MT) („000 MT) 12% 123 114 112 101 88% 2009 2010 2011 2012 KSA Egypt Savola Plastics operates in 2 countries (KSA and Egypt) and exports to 35 countries
Slide 45: Financial Performance
Financial Performance CAGR Revenue 12% 103 100 91 100 1,002 1,053 884 749 2009 2010 2011 2012 Revenue (SAR millions) NI (SAR millions)
Slide 46: Strategic Growth Drivers
Strategic Growth Drivers Organic growth Export to Europe • Push organic sales in • Leverage on cost KSA and Egypt advantage to grow • Increase primary stretch film business in flexible packaging in European markets KSA and enter flexible packaging in Egypt Also, consolidate industry in KSA and Egypt
Slide 47: Market size and Savola market share
Strategic Growth Drivers Market size (SAR blns) and Savola market share (%) Rigid Flexible Total Market Size Savola Share Market Size Savola Share Market Size Savola Share 5.0 3.0 5-6% 8.0 10-11% 13-14% KSA 2.8 3-4% 1.8 0% 4.6 2-3% Egypt Savola Plastics is dominant in the food and beverage businesse
Slide 48: Cost advantage for European exports
Strategic Growth Drivers Total market of around 1.8 mln tonnes in Europe for plastic film Basic raw material prices higher in Europe by around 15-20% 1. Low Resin Cost Total delivered cost from delivered cost Electricity cost in 2. Low Energy KSA to Europe is less by 10- KSA is less by 4. Low 20% fo
Slide 49: Savola Investments
Lilo ls , Dar Al Tamleek A Qoloisl Kaeo)! Kiyas Knowledge Economic City Savola Investments
Slide 50: Strategic Investments
Strategic Investments Market value* of Net profit 2012 Ownership as of Investment Savola holdings (SAR mlns) 31 Dec. 2012 (SAR mlns) Almarai 1,440 36.52% 11,778 Herfy 181 49% 1,864 Kinan/ 106 29.9% NA Masharef *Market value as of 28th November 2013 Investments which are complimentary to the Group‟s
Slide 51: Non-core Investments
Non-core Investments All numbers are in SAR millions All book values as of 31st December 116 27 1,640 209 365 397 455 62 10 KEC EEC Taameer Mutoun Intaj Joussour Swicorp Other Total Listed Un-listed % Ownership 11.4% 0.88% 5% 80% 50% 15% 15% Non-core investments to be exited overtime
Slide 52: Investments Strategy
Investments Strategy Investment Executed strategy Asfan - In-kind contribution to Masharef project Yasmine Riyadh & Land - Sold to Kinan with realized capital gain of SAR 76 mln and SAR 77 mln in 2011 Hanaki Jeddah Medina land - Agreement signed to sell to KEC with expected capital gain of SAR 231 m
Slide 53: Financials
3 Financials
Slide 54: Revenue Growth
Revenue Growth SAR mlns 27,391 CAGR 21.3% 25,196 21,029 17,917 13,821 10,410 2007 2008 2009 2010 2011 2012 Foods Retail Plastics Strong and consistent revenue growth
Slide 55: Income from Core Operations
Income from Core Operations SAR mlns CAGR 23.2% 1,500 1,355 1,082 933 855 477 496 2007 2008 2009 2010 2011 2012 2013 (G) Net income from operations has grown consistently
Slide 56: Return on Net Capital Employed
Return on Net Capital Employed SAR blns RONCE 13.8% 2.1 11.4% 3.3 Reallocation of NCE Non-Core Assets capital from non- core investments NCE Core Businesses 15.0 to core 9.9 businesses 2009 2012 RONCE has increased over the past few years due to focus on core businesses
Slide 57: Total Shareholders’ Return
Total Shareholders’ Return Total shareholders’ return SAR per share over 16% 40.0 32.0 28.7 1.25 1.30 1.40 2010 2011 2012 Share price Dividend per share
Slide 58: Savola Group Share Price
Savola Group Share Price Share price increase of 35% 55.25 8,045 + 18% 41 6,791 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Savola Index Tadawul Index
Slide 59: Debt Position
Debt Position 3.24 2.24 2.35 2.11 2.15 0.88 0.83 0.62 0.52 0.63 0.65 0.21 2007 2008 2009 2010 2011 2012 Net Debt/EBITDA Debt to equity ratio Healthy balance sheet with large amount of unutilized bank lines
Slide 60: Cash Flow Bridge
Cash Flow Bridge SAR mlns 1,204 3,409 618 1,091 4,669 2,366 1,866 1,001 943 Cash Cash from Investments Dividends Borrowings/ New Capex Dividends Cash Dec. 2009 operations sold received Others investments paid Dec. 2012 Source of funds Use of proceeds Strong cash flow generation
Slide 61: Non-managed Businesses
Non-managed Businesses SAR mlns 2012 853 549 2011 682 520 Managed 2010 527 360 Non Managed 2009 494 458 2008 102 101 2007 99 1,131 Reliance on non-managed businesses has reduced over time
Slide 62: Intangibles
4 Intangibles
Slide 63: Savola Ethics and Values
Savola Ethics and Values Balanced Way We will continue to adhere to our 1 ethics and values framework Amanah (Honesty) Shareholder We will ensure that we build a live, 2 inspiring model of our ethics and values Taqwa Birr for the future generations of Savola (Empathy) (Fairness) Community Employee M
Slide 64: Corporate Social Responsibility
Corporate Social Responsibility — Makeen center for training and employing persons with disabilities — Accessibility program — Participating in Injaz programs — Supporting various organizations 175 persons graduated from Makeen program in 2012
Slide 65: Pledges and Bridges
Pledges and Bridges Accessibility Awareness Family Post employment Training Workshop Sessions to on Program visits and follow Prepare Disabilitythe up Workplace Confidence 175 beneficiaries graduated from the program in 2012
Slide 66: Recognition for Intangibles
Recognition for Intangibles — Forbes ranked Savola as No. 1 among the Top 500 companies (Food Industry sector) in 2013 across Arab World — Savola MD awarded CEO excellence award in 2013 by The Middle East Excellence Awards Institute — Savola Group ranked No. 2 among Arab World and No. 1 in KSA publi
Slide 67: Appendix - Financial Results
Appendix - Financial Results
Slide 68: Annual Financials
Annual Financials (all figures are in SAR millions) Segment Wise Financials December 2012 December 2011 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 9,008 1,593 1,028 395 1,134 7,958 1,081 591 234 680 Oil-Start-up Markets* 1,557 226
Slide 69: Quarterly Financials
Quarterly Financials (all figures are in SAR millions) Segment Wise Financials Q1- 2013 Q2- 2013 Revenue Gross Profit EBIT Net Income EBITDA Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 2,786 587 438 150 459 2,201 435 279 146 298 Oil-Start-up Markets* 313 39 11 4 15 326 40 15
Slide 70: Quarterly Financials
Quarterly Financials (all figures are in SAR millions) Segment Wise Financials Q3- 2013 Revenue Gross Profit EBIT Net Income EBITDA Food Oil-Mature Markets 1,900 354 195 112 219 Oil-Start-up Markets* 305 41 11 3 15 Total Oil 2,205 395 205 115 234 Sugar 923 105 71 39 94 Pasta 114 17 9 9 14 Total Food
Slide 71: Thank You
— THANK YOU