East African Breweries Plc · NSEKE:EABL
East African Breweries — H1 FY2008 Earnings Presentation
40 slides from East African Breweries's earnings presentation, Mar 3, 2008
Slide 1: EABL H1 Financial Year F08
Growth Platform _ Continuing Momentum EABL H1- Financial Year F08 Nairobi Serena Hotel - - 3rd March 2008
Slide 2: Agenda
Agenda Business Review Gerald Mahinda - GMD Financial Review Chris Caldwell - GCD Q&A GMD & GCD Highly Restricted 2
Slide 3: Agenda
Agenda Business Review Gerald Mahinda - GMD Financial Review Chris Caldwell - GCD Q&A GMD & GCD Highly Restricted 3
Slide 4: Regional Economies
Regional Economies … Economies sustained the strong growth trajectory but Kenya challenging GDP Kenya +7.1%, Uganda +6.0%, Tanzania +6.2%. 2007 Kenya – tourism, agriculture, telecomms, services. Key Growth Uganda – services, agriculture. Sectors Tanzania – agriculture, mining, tourism. Infla
Slide 5: H1 Highlights
H1 Highlights > Continuing strong top-line performance with good leverage. > Execution - - improved but some challenges in Uganda. … softened domestic demand, few challenging environmental elements. > Key Challenges. talent, supply1, competition2, infrastructure, fiscal and regulatory/legislative3 e
Slide 6: Financial Summary
Financial Summary versus H1 F07 Volumes - EUs 19% Net Sales Value [NSV] 27% Gross Profit 23% Advertising & Promotions 21% Profit Before Tax [PBT] 22% Earnings Per Share [EPS] 28% Highly Restricted 6
Slide 7: Our Markets
Our Markets Strong performance posted in the Half Year in all markets except Uganda that was soft … HY F06 - F08 Total Volume Performance - - by Country 3,000 250 > Kenya +22%. 2,500 200 2,000 > Uganda 0% - - flat on PY. 150 1,500 100 1,000 > Tanzania +15% and Exports 500 50 +221%. 0 0 F06 Act F07 A
Slide 8: Our Markets
Our Markets Group 6Yr Volume Trends - - EUs 000 3,500 3,125 Our Beer and Spirits have 3,000 2,627 sustained the strong growth. 2,500 2,143 2,012 2,000 1,843 1,792 Overall 5Yr CAGR = 14%. 1,500 1,000 677 819 Category performance: 563 299 Beer 11% 500 215 274 Spirits 31% 0 F03 F04 F05 F06 F07 F08 Act
Slide 9: Shape of Our Business
Shape of Our Business … HY F08 Volumes - - Contribution by Market 2% 1% 4% 5% 6% 6% 23% 22% 18% 70% 71% 72% F06 F07 F08 Ken Uga Tan GLR > Kenya still dominant market > Softness in Uganda … > Significant increase in Exports share > Overall, growing share of Kenya and Exports business Highly Restricte
Slide 10: Shape of the Portfolio
Shape of the Portfolio … Volumes in EUs - - Contribution by Category/Format 21% 21% 21% > Increase in share of 7% 13% 17% Senator Keg: +10% > Spirits share holding 72% 67% 62% > Overall, growth led by premium & emerging segments F06 Act F07 Act F08 Act Bottled Beer Keg Beer Spirits > Mainstream segm
Slide 11: Brands – Kenya
Brands – Kenya sustained strong Brand initiatives Tusker na Chapaa, Chapaa na Tusker + Tusker Safe and Happy Holidays - led to +10% growth. Guinness was +23% on back of strong Football campaign and in-bar activations. Richot [+8%] re-energised through a pack renovation and intensified focus.
Slide 12: Brands - Uganda
Brands - Uganda soft demand plus in-market issues impacted H1 performance despite maintaining pole market position Bell up 3%. UG Waragi +17% on back of strongly resonating consumer campaign. Guinness +63% on sound Football activations. Tusker Malt up 18% albeit supply gaps. …but Pilsner a
Slide 13: Brands - Tanzania
Brands - Tanzania Strong growth momentum sustained [+13% on PY] despite major supply challenges … Tusker sustained the growth at +33% _ refreshed new imagery in long neck bottle. but … Guinness and Pilsner down off major product outages. Malta was +3% constrained by capacity and availability.
Slide 14: Tusker Academy launched
Tusker Academy launched … Building towards amazing relationships with key partners and enabling drive Distributor and Retailer execution excellence. Highly Restricted 14
Slide 15: Strategic Initiatives
Strategic Initiatives Distributor Financing Scheme [DFS] - - improved to enhance support to our partners New Horizon* - - 13 project streams underway including: > Supply chain organisation and capability development, > Glass and crates management, > Inventory management, and > Sales and Operatio
Slide 16: Investing for Growth
Investing for Growth … We spent KES. 0.5Bn on building the growth platform. > In KENYA we spent KES. 0.4Bn on inter alia: 2nd Mash filter and 2 DPVs. Beer filters and deaeration plant. New 80,000Bph* line ordered [to cost KES. 3Bn straddling F08 & F09] > In UGANDA spend amounted to KES. 0.1Bn
Slide 17: Our Communities
Our Communities Our enriching lives agenda continued … Computers given out to: > Police force > Kenya Institute of the Deaf > AISEC E-Green planted 40,000 trees. 20 additional scholarships awarded 130,000 lives touched by our water of life program KES. 4Mn donated to Red Cross Kenya Highly
Slide 18: Our Responsibilities
Our Responsibilities … Our RD cadence taking shape … 5% of total Group A&P set aside We ID: 200 bars activated. 100 planned for BOY. ‘Someone for the road’ campaign initiated. Highly Restricted 18
Slide 19: ‘Someone for the Road’ campaign
‘Someone for the Road’ campaign Highly Restricted 19
Slide 20: Our Sports Agenda
Our Sports Agenda … KES. 390Mn committed to Sports Football Rugby Athletics, and Golf Highly Restricted 20
Slide 21: H2 Outlook
H2 Outlook Positive. Focused execution across all markets. H2 Outlook Expand business footprint – grow exports. Diligent category management – value extraction. We will continue to focus on … People Innovation Geographic Expansion Portfolio Supply Chain Mngt Social Responsibility Highly Restri
Slide 22: Focus Areas in H2
Focus Areas in H2 Execution - - strong sales and marketing initiatives e.g. Tusker Project Fame II [TPF II]. COGS - - managing continuing input cost pressures. Competition - - increasing our share of wallet. Stakeholder relationships and business environment. Highly Restricted 22
Slide 23: A 4 Minute Clip of Our Initiatives
A 4 Minute Clip of Our Initiatives … Highly Restricted 23
Slide 24: Agenda
Agenda Business Review Gerald Mahinda - GMD Financial Review Chris Caldwell - GCD Q&A GMD & GCD Highly Restricted 24
Slide 25: Continued growth across Key Metrics
Continued growth across Key Metrics Net sales EPS growth of 28% 27% increased by Marketing spend Generating free 21% 7.2Bn KES increased by cash flow of Returning cash to Delivering profit 22% 5.2Bn KES shareholders of before tax growth of Continued Growth in 1.9Bn KES 34% Interim dividends 34% High
Slide 26: Delivering broad based NSV Growth
Delivering broad based NSV Growth By Business Unit By Category Spirits RTD G ro up 8% D e ma nd S up p ly 4% U g a nd a 12 % 19 % CSD 2% Ex p o rt 3% Beer 86% D e ma nd Ke ny a 66% Highly Restricted 26
Slide 27: Driven by our key Brands
Driven by our key Brands … Volume 15% Volume 16% Net sales 22% Net sales 28% Volume 7% Volume 3% Net sales 9% Net sales 11% Volume 23% Volume 13% Net sales 29% Net sales 28% Volume 0% Volume 29% Net sales 7% Net sales 29% Highly Restricted 27
Slide 28: Kenya
Kenya … Growth based on superior execution Sales growth based on superior execution in market behind core brands e.g. Tusker, Guinness, Smirnoff & Richot Focus on premium and mainstream brand sales ensured good leverage Volume growth 22% Impact of Kenya’s unrest felt in Jan & Feb Net sales gro
Slide 29: Uganda
Uganda … Challenging H1 in wake of environmental issues Floods in the North of the country impacted H1 performance exacerbated by inaccessible West that affected on-trade consumption Despite this we still saw strong growth and more importantly share gains Continued focus on driving brand Volum
Slide 30: Exports & Great Lakes
Exports & Great Lakes … Southern Sudan Eastern Further strengthening of DRC performance Rwanda Dedicated resources & new Burundi infrastructure in place to streamline our route to market paying dividends and set us up well for H2 Floods in Northern Uganda impaired Volume growth 221% distribution
Slide 31: Supply Operations
Supply Operations … Changing footprint & South increasing cost pressures Democratic Sudan Republic of New capacity on stream in Kenya & Congo Uganda Uganda allows improved sourcing model Lake Kenya Victoria Rwanda Further significant capacity (beverages, Burundi glass & maltings) in the pipeline
Slide 32: P&L Leverage impacted by Costs
P&L Leverage impacted by Costs … Focus on mainstream & premium paying off in revenue growth vs. volume growth 30% Continued marketing 25% investment critical for future 20% success 15% Cost pressures (raw materials, utilities & fuel) a 10% 26% major challenge impacting 27% 23% 24% 21% 22% leve
Slide 33: Income Statement in Mn KES.
Income Statement in Mn KES. 2008 2007 Movement Kshs'M Kshs'M Kshs'M Change % Net Revenue 16,089 12,654 3,435 27% - Cost of Sales (6,153) (4,536) (1,617) 36% Gross profit 9,936 8,117 1,818 22% Other operating income (Expense) 85 107 (22) -20% Selling and distribution costs (1,110) (918) (192) 21% Adm
Slide 34: Key Measures of Success
Key Measures of Success Net revenue of 16.1Bn growing 27% PBT of 6.5Bn growing 22% ROIC of 29% growing 373bps EPS of KES 5.87 growing 28% DPS of KES 2.40 growing 34% Highly Restricted 34
Slide 35: Our Dividend Proposal
Our Dividend Proposal > Interim dividend proposal of KES 2.40/share = +34%, in line with dividend policy > Cash dividend of 1.9Bn KES = +34% > DPS growth strong and paid on more shares following Bonus issue Interim Dividend Grow th 1.9Bn KES, +34% 2.500 2.000 CAGR 28% 1.500 Ksh / Share 1.000 0.500 -
Slide 36: Some Issues
Some Issues > Impact of Kenyan unrest felt across different areas of business in Jan & Feb: Consumption – consumer confidence, destruction of bars, disposable income Distribution – disrupted routes, higher insurance & security Input materials & utilities – supply shortages & rapid inflation >
Slide 37: Outlook
Outlook Strong H1 Results but likely slower in early H2 with resumed momentum back end… > Kenya – The unrest in Kenya impacted growth in Jan & Feb but we expect strong momentum likely back end of FY post Political deal. > Uganda – Will recover from environmental impacts of H1 & continue to be the pl
Slide 38: Agenda
Agenda Business Review Gerald Mahinda - GMD Financial Review Chris Caldwell - GCD Q&A GMD & GCD Highly Restricted 38
Slide 39: Ask EABL
Ask EABL … Highly Restricted 39
Slide 40: End
End Highly Restricted 40
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