East African Breweries Plc · NSEKE:EABL
East African Breweries — FY2008 Earnings Presentation
44 slides from East African Breweries's earnings presentation, Aug 29, 2008
Slide 1: EABL F08 Investor Group Briefing
EABL F08 Investor Group Briefing “outperforming in a challenging environment ...” Gerald Mahinda - Group Managing Director Peter Ndegwa - Group Finance Director 29 August 2008, 16h00
Slide 2: Agenda
Agenda > Business Review Gerald Mahinda > Financial Review Peter Ndegwa >Q&A All
Slide 3: Introductions
Introductions career background > 2004 Joined EABL – Group Head of Strategy > 2006 Sales Director EABL Kenya Demand > 2008 Group Finance Director Peter Ndegwa Group Finance Director
Slide 4: Business Review – Gerald Mahinda
Business Review – Gerald Mahinda
Slide 5: Overview
Overview > Strong head-line performance with good leverage. > Great execution across all business units. > Continued strong innovation. > Despite some key challenges. talent, supply security, regulation & legislation, water, inflationary pressure. > Outlook for F09 – very promising. economic restora
Slide 6: Robust performance posted vs. LY
Robust performance posted vs. LY Volume* +15% Revenue** PBT# +26% +16% * includes soft drinks – all reported in equivalent units ** excludes associate company revenues - tanzania # includes share of associate income - tanzania
Slide 7: Continuing Strong Delivery Trend
Continuing Strong Delivery Trend Volumes 000EUs Revenues Mns 5Y CAGR +15% 5Y CAGR +16% 8,000 35,000 7,000 30,000 6,000 25,000 5,000 20,000 4,000 15,000 3,000 10,000 2,000 5,000 1,000 0 0 F03 F04 F05 F06 F07 F08 F03 F04 F05 F06 F07 F08 Ken Uga Tz However margins under inflationary pressure CAGR compo
Slide 8: Cost pressures
Cost pressures Crude Oil Prices / Barrel - - US$ +82% 134.0 125.8 109.4 102.2 91.8 90.6 92.3 95.1 78.6 81.8 67.6 68.4 69.7 73.7 71.8 world Oil prices have 59.7 62.1 54.9 58.8 62.1 increased 82% in the last 12 months [F08]! Nov 06 Nov Jan 07 Jun Jan 08 Jun Jul Mar Apr Mar Apr Feb Aug Sep Dec 07 Feb O
Slide 9: Despite challenging environment
Despite challenging environment Kenya Uganda Tanzania Real GDP Growth [2008] 4.50% 8.90% 8.00% Headline Inflation 29.30% 12.40% 9.10% source: AIG June 2008 Report
Slide 10: All markets have Outperformed
All markets have Outperformed 7,000 Kenya 8.0% 1,800 Uganda 10.0% 5Y CAGR +17% 7.0% 1,600 5Y CAGR +14% 9.0% 6,000 1,400 8.0% 6.0% 5,000 7.0% 1,200 5.0% 6.0% 4,000 1,000 4.0% 5.0% 3,000 800 3.0% 4.0% 600 2,000 3.0% 2.0% 400 2.0% +22% +20% +27% +18% +27% +27% 1,000 1.0% +6% +6% +5% 200 -1% 1.0% 0 0.0%
Slide 11: Supported by solid investment
Supported by solid investment CAPEX Kes Mns 3,500 Kes. 3,050Mn spend in F08. 3,000 2,500 > Capacity 2,000 > Capability 1,500 1,000 > Quality 500 - > Safety F02 F03 F04 F05 F06 F07 F08 We plan to spend another kshs 5bn
Slide 12: And increased marketing spend
And increased marketing spend Advertising & Promotion costs Kes. 2,165Mn spend in F08. F08 F07 > New to world campaigns: TPF F06 5Y CAGR > Trade support +19% F05 > Innovation & renovation F04 F03 > Equity building 0 500 1,000 1,500 2,000 2,500 Kes. Mns
Slide 13: Amidst Changing Consumer landscape
Amidst Changing Consumer landscape > New players. local spirits, imported beers and spirits. > Expansion of existing players supply capacity, marketing investments, RTM > Other sectors. telecoms, financial.
Slide 14: But growth prospects abound …
But growth prospects abound … at South Africa’s PCC* of 59Litres the total Eastern Africa market would be 39Mn Hl versus 11Mn today. 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 SA Burundi Botswana Angola Kenya Sudan Uganda Cameroon Rwanda Tanzania source: plato logic, eiu, eabl *Per Capita Consumption su
Slide 15: In our core and non-core markets
In our core and non-core markets massive opportunity to grow PCC in all six markets increasing incidence of transactions and recruiting new consumers 20.0 Consumption / Cap 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Kenya Uganda Tanzania Rwanda Burundi Sudan Consumption / Cap
Slide 16: Supported by positive fundamentals
Supported by positive fundamentals GDP at PPP/Cap [US$] growth 2008/09 Population growth 2008/09 20% 4.5% 18% 4.0% 16% 4.0% 3.5% 14% 3.4% 3.0% 12% 2.5% 2.6% 10% 2.0% 2.2% 2.2% 8% 2.0% 1.5% 6% 1.0% Tanzania 4% Rwanda Burundi Uganda Sudan Kenya 2% 0.5% 0% 0.0% Kenya Uganda Tanzania Rwanda Burundi Suda
Slide 17: The Group at a Glance
The Group at a Glance Kenya Uganda Number of plants 1 Number of plants 1 Total volumes 5.7M EUs Total volumes 1.4M EUs Total serves* in F08 1,255Mn Total serves* in F08 310Mn Share of Group’s volume 71% Share of Group’s volume 18% Top selling brands: Top selling brands: > Senator, Tusker, Guinness >
Slide 18: The Group at a Glance
The Group at a Glance Tanzania Great Lakes Region Number of plants 0 Number of plants 0 Total volumes 0.5M EUs Total volumes 0.4M EUs Total serves* in F08 110Mn Total serves* in F08 1,255Mn Share of Group’s volume 6% Share of Group’s volume 5% Top selling brands: Top selling brands: > Tusker, Guinne
Slide 19: Slide 19
Slide 20: Slide 20
Slide 21: Slide 21
Slide 22: Strong brand portfolio performance
Strong brand portfolio performance Premium 300 Portfolio Shape 250 200 150 50.5% 100 46.0% 50 0 F03 F04 F05 F06 F07 F08 4,500 Mainstream 4,000 3,500 3,000 2,500 2,000 3.5% 1,500 1,000 500 Premium Mainstream Emerging 0 F03 F04 F05 F06 F07 F08 4,000 Emerging 5Y CAGR 5Y CAGR 5Y CAGR 3,500 +9% +4% +50%
Slide 23: Performance was anchored on
Performance was anchored on > Strong renovation and innovation > Refreshed graphics > Equity building
Slide 24: Renovation of Mainstream
Renovation of Mainstream > Strengthening / New consumer appeal > Refreshed graphics > Brand communication
Slide 25: Tusker Renovation
Tusker Renovation > Strengthening consumer appeal > Refreshed graphics > Building equity > Reinforcing quality
Slide 26: Pilsner Re-launched
Pilsner Re-launched > New consumer appeal > Refreshed graphics > New Brand communication
Slide 27: As well as Emerging
As well as Emerging > Strengthening consumer appeal > Refreshed graphics > Reinforcing quality credentials
Slide 28: Innovation into new market spaces
Innovation into new market spaces Mainstream cream liqueur Adult soft drink Emerging sharing / large Pack
Slide 29: Alvaro has shown great growth
Alvaro has shown great growth > March 2008 - - launch > Strong consumer appeal and demand > Test market - - strong demand > 8Mn bottles [320K cases] sold in 4months! 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - March April May June July
Slide 30: Enriching the lives of our communities
Enriching the lives of our communities we touched … > 336,000 lives through Water of Life > 100 scholarships to date in our Skills for Life > Launch of Green Goals: 55,000 trees planted, 62Km long cans ‘waste’ recycled, biggest glass recycling and all effluent treated
Slide 31: and strong RD Campaign
and strong RD Campaign we intensified our execution through we ‘ID’! > 500 bars recruited and activated > 2,500 waiters trained > Modules and CD training manuals provided
Slide 32: In summary our sources of growth …
In summary our sources of growth … Innovation, Renovation Commercial & Brand Capabilities Building Super Engaged Talent Horizontal Geographic Expansion Expansion
Slide 33: Financial Performance
Financial Performance Peter Ndegwa Group FD
Slide 34: A Solid Performance ……..
A Solid Performance …….. G ro w th V o lu m e 15% N et R evenue 26% G ro s s M a rg in 22% M a rk e tin g S p e n d 37% P ro fit b e fo re T a x 16% E a rn in g s p e r s h a re 23%
Slide 35: Our brands grow profitably
Our brands grow profitably Volume 11% Volume -4% Gross Margin 26% Gross Margin 11% Volume -16% Volume 69% Gross Margin 10% Gross Margin 15% Volume 19% Volume 4% Gross Margin 10% Gross Margin 35% Volume 17% Volume 1% Gross Margin 24% Gross Margin 13% Volume 42% Volume 14% Gross Margin 31% Gross Margi
Slide 36: Strong performance across the Region
Strong performance across the Region Kenya Net Sales 26.2bn 28% Profit Before Tax 9.7bn 17% Uganda Net Sales 6.6bn 17% Profit Before Tax 1.2bn 12% Tanzania Volumes (eus) 553k 32% Share of Associate 0.79bn 10% Exports Volumes 389k 105% Net Sales 1.5bn 50%
Slide 37: But clearly, a ‘tale of two-halves’…
But clearly, a ‘tale of two-halves’… +19% headline growth in H1 F08 Grow th vs. LY - - HY Comparisons down to +10% in H2! 64% Impact of PEV effects during Jan - Mar … reduced distribution and consumption. Intensified cost pressures - - major inflation bust, global oil 27% price rally ... 23% 22%
Slide 38: Despite a challenging second half
Despite a challenging second half Kenya Uganda 1,000 140 120 800 100 80 600 60 400 40 20 200 - - (20) H1 H2 H1 H2 Tanzania EABL Group 80 1,000 60 800 40 600 20 400 200 - - (20) H1 H2 H1 H2 Share of Associate Volumes Advertising & Promotions Trading Profit
Slide 39: Growing earnings
Growing earnings 100% 12.00 6.8b 8.2b 8.6b 10.7b 12.3b 10.00 80% 8.00 60% 6.00 40% 4.00 20% 2.00 0% - 2004 2005 2006 2007 2008 Net Revenue Selling and distribution costs Profit before taxation Basic earnings per share
Slide 40: Cost pressures escalate
Cost pressures escalate > Costs continue to rise driven by inflation, fuel and cereals costs 16,000 14,000 Cost of Goods Trend 12,000 We have put measure to 10,000 mitigate against these 8,000 6,000 •Consider source of raw 4,000 material. 2,000 - •Use of alternative raw 2004 2005 2006 2007 2008 mate
Slide 41: Performance along key measures
Performance along key measures Kshs 32.5 bn Net Revenue Growth 26% Kshs 12.3 bn PBT Growth 16% Kshs 9.3 bn Freecashflow Growth 9% Rate 51% ROIC Growth 10% Kshs 9.55 EPS Growth 23% Kshs 8.05 DPS Growth 10%
Slide 42: Our Dividend Proposal
Our Dividend Proposal > Final dividend proposal of Kes 5.65/share > Final dividend payment of Kes 4.5Bn > Taking full year dividend to Kes 8.05/share = +10% growth on LY (7.76) > Full year dividend payment of Kes 6.4Bn (vs 5.8bn) or 85% Pay out DPS Growth 9.00 8.00 5Y CAGR +26% 7.00 6.00 Kes / Share
Slide 43: Q & A
Q & A
Slide 44: EABL F08 Investor Group Briefing
EABL F08 Investor Group Briefing End
East African Breweries — FY2008 Earnings Presentation on 6ix