East African Breweries Plc · NSEKE:EABL
East African Breweries — FY2021 Earnings Presentation
47 slides from East African Breweries's earnings presentation, July 2021
Slide 1: F21 Full Year Results
F21 FULL YEAR RESULTS JULY 2021
Slide 2: Agenda
AGENDA F21 Business Review F21 Financial Review Looking Ahead Q&A
Slide 3: F21 FY Business Review
F21 FY BUSINESS REVIEW • Macro Environment • Commercial Strategy • Performance Highlights • Investing into the future • Growing Value for our Stakeholders • Our People Jane Karuku
Slide 4: A Challenging Macro & Restrictive Operating Environment
A CHALLENGING MACRO & RESTRICTIVE OPERATING ENVIRONMENT GDP STRAINED OVER THE PAST YEAR VUCA BUSINESS ENVIRONMENT Kenya Uganda Tanzania • Covid-19 Impact: 5.2% 5.7% 3.7% 4.5% 4.5% 4.0% 4.6% 4.0% • Increased volatility due to curfews and restrictions 0.0% • Depressed consumer spending -0.1% -0.1% -1.
Slide 5: Our Strategy House
OUR STRATEGY HOUSE To create the best performing, most trusted and respected consumer Ambition products company in Africa Vibrant Explode Strategic Shape New Mainstream Mainstream Win in Premium imperatives Beer Spirits Frontiers Aspirational and Accessible Innovations Route to Reputation Supply Foo
Slide 6: Significant Consumer, Channel and Category Shifts
SIGNIFICANT CONSUMER, CHANNEL AND CATEGORY SHIFTS E-COMMERCE EXPLOSION AND LOWER TEMPO AND CASUAL PREMIUM CONSUMPTION AND GROWTH IN INFORMAL AND STRENGHTENING OFF TRADE OCCASSIONS SPIRITS ACCELERATION ILLICIT • Consistent strength in at- • Smaller familiar groups • Increased at-home • Disposable inc
Slide 7: Leveraged Premium Acceleration, Adapted RTC & Innovated in Future Consumption Occasions
WE HAVE LEVERAGED PREMIUM ACCELERATION, ADAPTED OUR RTC & INNOVATED IN FUTURE CONSUMPTION OCCASIONS ELEVATED BRAND EXPERIENCES E-COMMERCE BRINGING BRANDS CREATIVITY ADDRESSING NEW CONSUMER (SIGNATURE SERVES, PREMIUM FOCUS) CLOSER TO THE CONSUMER OCCASSIONS
Slide 8: Extending Our Portfolio to Address Increased At-Home Beer Consumption
EXTENDING OUR PORTFOLIO TO ADDRESS INCREASED AT-HOME BEER CONSUMPTION CONVENIENT PACK FORMATS ONE WAY GLASS FORMAT FOR OFF TRADE BEER IN CAN PORTFOLIO EXTENDED INTRODUCED CHANNEL
Slide 9: Innovation Fuelled Growth Across Markets, Categories & Segments
INNOVATION FUELLED GROWTH ACROSS MARKETS, CATEGORIES & SEGMENTS DRIVE PRICE ACCESSIBILITY THROUGH NEW BRANDS TO TAP INTO NEW FUELLING THE GIN EXPLOSION PACK FORMATS OCCASSIONS
Slide 10: Embedded a Digital-First Mindset Reaching Millions of Consumers
EMBEDDED A DIGITAL-FIRST MINDSET REACHING MILLIONS OF CONSUMERS IN-HOUSE DIGITAL MARKETING AGENCY INFLUENCER MARKETING DELIVERED USING ONLINE PLATFORMS TO BUILD AND TO BUILD AND DRIVE IN-CULTURE EARNED MEDIA VALUE STREAM LIVE ENTERTAINMENT CONTENT
Slide 11: Strengthening Our East African Footprint
STRENGTHENING OUR EAST AFRICAN FOOTPRINT WE OWN THE BIGGEST & FASTEST BUILDING STRENGTH IN EXPORT INVESTED AHEAD IN STRATEGIC BRANDS GROWING BRANDS MARKETS
Slide 12: Strong Recovery, With Growth vs Pre C19
WE HAVE DEMONSTRATED STRONG RECOVERY, WITH GROWTH VS PRE C19 Net Sales (Kes bn) +15% -9% 86 83 CAGR +8% 75 73 70 F17 F18 F19 F20 F21
Slide 13: Optimised and Strengthened Portfolio to Achieve Double Digit Growth
OPTIMISED AND STRENGTHENED OUR PORTFOLIO TO ACHIEVE DOUBLE DIGIT GROWTH ACROSS ALL MARKETS MARKET NET SALES VS LY KEY BRANDS +10% +33% +15% +15%
Slide 14: Shift in Regional Contribution
SHIFT IN REGIONAL CONTRIBUTION EABL REPORTED NET SALES BY REGION, F17 EABL REPORTED NET SALES BY REGION, F21 9% 15% 16% F17 19% F21 66% 75% Kenya Uganda Tanzania Source: EABL internal data
Slide 15: Beer Growing Fast, Spirits Growing Faster
BEER GROWING FAST, SPIRITS GROWING FASTER VIBRANT MAINSTREAM BEER EXPLODE MAINSTREAM SPIRITS WIN IN PREMIUM SHAPE NEW FRONTIERS ` +12% +23% +21% +6% Net sales growth vs prior year
Slide 16: Kenya: Resilient Recovery Across Categories
Kenya RESILIENT RECOVERY ACROSS CATEGORIES +10%* Bottled Beer +5% Mainstream Spirits Premium Spirits +22% +32% Senator Total Spirits +3% +24% * Net sales growth vs prior year
Slide 17: Uganda: Amplified Double-Digit Growth
Uganda AMPLIFIED DOUBLE-DIGIT GROWTH +33%* Premium beer +34% Mainstream Beer Value beer +46% +21% Total Spirits +24% * Net sales growth vs prior year * Net sales growth vs prior year
Slide 18: Tanzania: Robust Growth Across Categories
Tanzania ROBUST GROWTH ACROSS CATEGORIES +15%* Serengeti Family +12% Pilsner Guinness +31% +18% Premium Spirits +38% * Net sales growth vs prior year * Net sales growth vs prior year
Slide 19: Investing Smartly for the Long Term
INVESTING SMARTLY FOR THE LONG TERM MSS Cube – Moshi, Tanzania Packaging Line - Uganda Biomass Plant – Kenya & Uganda Returnables & Keg Barrels Filtration Plant - Uganda Water Recovery – Kenya & Uganda
Slide 20: Sustainability
# SUSTAINABILITY
Slide 21: By 2030 we will deliver a positive impact on society
By 2030 we will deliver a positive impact on society everywhere we live, work, source and sell
Slide 22: Positively Impacting Our Community by 2030
POSITIVELY IMPACTING OUR COMMUNITY BY 2030 • >13m people reached through Positive Drinking campaign • Reducing inequality through the STEM program • The Red Card under the ‘Cool Teens Don’t Drink’ campaign • Female packaging lines in TZ and UG Source: EABL internal data
Slide 23: Positively Impacting Our Community by 2030
POSITIVELY IMPACTING OUR COMMUNITY BY 2030 • Water of Life Programs Total water • New water recovery, purification and • Locally sourced barley and sorghum replenished (198,501 m³) reuse facilities, saving over 1.2 bn ltrs³ from >62k farmers across the region • Access to water for over 30k people of
Slide 24: Continuing to Support Our Partners and Communities
CONTINUING TO SUPPORT OUR PARTNERS AND COMMUNITIES COMMUNITY SUPPORT • Donations of Sanitizers in KE and TZ • Raising the bar program: Partnering • Diageo Bar Academy: Providing • Contribution of medical equipment in UG with bars to reach consumers safely support and training to bar owners Source: E
Slide 25: Ensuring the Safety and Wellbeing of Our People
ENSURING THE SAFETY AND WELLBEING OF OUR PEOPLE OUR PEOPLE INITIATIVES • Virtual learning through Leaders as • Annual wellness check and mental • Telehealth offering online medical Teachers program health awareness sessions services • Online learning via My Learning Hub • Introduced a post retiremen
Slide 26: External Recognition Across the Business
EXTERNAL RECOGNITION ACROSS THE BUSINESS • Overall Winner At 2020 • Diageo Global Brewery of • Social Investment • Recognized for advancing MSK Awards the year Campaign of the Year at SDGs implementation the Public Relations under private sector Society of Kenya Awards
Slide 27: Thank You
Thank You Please hold questions to the end
Slide 28: F21 FY Financial Performance
F21 FY FINANCIAL PERFORMANCE • Financial Highlights • Topline Performance • Profitability • Balance Sheet • Cash Performance • Capex Risper Ohaga
Slide 29: Robust Performance in an Unprecedented Business Environment
ROBUST PERFORMANCE IN AN UNPRECEDENTED BUSINESS ENVIRONMENT Net Sales ( Kes bn) Gross Profit (Kes bn) +4% -2% Net Sales Growth +15% Gross Margin (%) +13% 50 100 150 100 83 86 150 50 80 75 38 37 100 33 60 12% 15% 50 46% 44% 44% 40 -9% 20 0 0 -50 0 0 F19 F20 F21 F19 F20 F21 Profit Before Tax (Kes bn)
Slide 30: Improved Financial Strength Despite Increased Costs
IMPROVED FINANCIAL STRENGTH DESPITE INCREASED COSTS F21 Kes bn F20 Kes bn Vs F20 Volume (m EUs) 14.1 12.4 13% Excise Duty (66.6) (58.4) 14% Net Sales 86.0 75.0 15% Cost of Sales (48.6) (42.0) 16% Gross Profit 37.4 33.0 13% EU – Equivalent unit
Slide 31: Unrelenting Recovery Across Segments
UNRELENTING RECOVERY ACROSS SEGMENTS +15% Kes bn 86 5 0 6 75 F20 Bottled Beer Senator Spirits F21 Growth vs Prior Year +14% +3% +24% Δ in contribution vs Prior Year 0ppt -2ppt +2ppt
Slide 32: Sequential Recovery of Top Line Performance Since F20H2
SEQUENTIAL RECOVERY OF TOP LINE PERFORMANCE SINCE F20H2 43% 10% -3% -29% F20 H1 F20 H2 F21 H1 F21 H2 Net sales growth vs prior year
Slide 33: Improved Volume and Product Mix
IMPROVED VOLUME AND PRODUCT MIX Kes’bn +13% 1.3 1.4 37.4 0.4 4.2 33.0 GM 43% F20 GP Volume Price Mix Cost F21GP
Slide 34: Revenue Growth Driving Rebound in the Bottom Line
REVENUE GROWTH DRIVING REBOUND IN THE BOTTOM LINE F21 Kes Bn F20 Kes Bn Vs F20 Gross Profit 37.4 33.0 13% Selling & Distribution (7.4) (6.6) 12% Administrative expenses (9.3) (8.6) 9% FX (1.2) (0.2) >100% Other expenses (4.7) (3.2) 48% Net Finance cost (3.9) (3.8) 3% Profit before Tax 13.6 10.7 28%
Slide 35: Gradual Recovery of Earnings
GRADUAL RECOVERY OF EARNINGS F21 Kes Bn F20 Kes Bn Vs F20 Profit before Tax 10.9 10.7 2% Income Tax (3.9) (3.6) 7% Profit after Tax 7.0 7.0 -1% EPS (Kes/Share) 5.51 5.17 7% DPS (KES/share) 0.0 3.0
Slide 36: Focus on Strengthening of Our Balance Sheet
FOCUS ON STRENGTHENING OF OUR BALANCE SHEET NON – CURRENT ASSETS NON - CURRENT LIABILITIES +5% +4% 4.8 66.0 45.6 62.7 7.8 0.4 0.1 1.4 43.6 0.7 F20 PPE Additions Depreciation Deferred F21 F20 Deferred Borrowings Lease liabilities F21 & Others income tax income tax TOTAL EQUITY +6% 14.0 7.2 6.3 14.9 F
Slide 37: Focus on Strengthening of Our Balance Sheet
FOCUS ON STRENGTHENING OF OUR BALANCE SHEET CURRENT ASSETS CURRENT LIABILITIES +31% +28% 34.1 39.7 2.8 2.7 0.2 26.0 7.3 31.0 8.8 0.8 F20 Inventories Trade and F21 F20 Trade Borrowings Bank Other F21 other and other overdraft receivables payables CURRENT RATIO +11% 6 200 Net Current Liabilities3 100
Slide 38: Improved Effective Cost of Debt
IMPROVED EFFECTIVE COST OF DEBT Kes bn 45 42 18 Effective cost of debt 41 40 16 Net Debt 35 14 30 12 25 11.2% 10 20 9.5% 8 15 6 10 4 5 2 0 0 F20 F21 Net Debt to EBITDA X2.1 X2.1
Slide 39: Cash Position Supported by Business Growth
CASH POSITION SUPPORTED BY BUSINESS GROWTH Cashflow Net cash generated from operations Kes Kes bn 21.6Bn 24 0.7 22 -3.1 20 18 -3.8 20.8 -14.2 -1.2 4.4 4 3.5 2 1.7 0 As at start Cash from Changes in Net Interest Income Net cash Net cash Foreign Cash and of year operations Working Paid tax paid used i
Slide 40: Supporting Quality Growth Through Strategic Investments
SUPPORTING QUALITY GROWTH THROUGH STRATEGIC INVESTMENTS Capex Spend Kes 8bn 12 Capex spend by Category 8 8 Maintenance & innovations; 0.4; 6% F19 F20 F21 Returnables & Barrels; 2.5; Capacity Expansion; 2.9; 32% 37% Capex % Net Sales Other; 0.2; 2% 12.7% Environmental; 1.8; 15.00% 10.5% 23% 9.3% 10.0
Slide 41: Thank You
Thank You Thank You Please hold questions to the end
Slide 42: Looking Ahead
LOOKING AHEAD • Tusker Centenary & UBL 75th Anniversary • F22 Priorities Jane Karuku Jane Karuku
Slide 43: Celebrating Our Local Jewels as We Achieve Landmark Milestones
CELEBRATING OUR LOCAL JEWELS AS WE ACHIEVE LANDMARK MILESTONES TUSKER CENTENARY UBL 75TH ANNIVERSARY We are ready for a big year on Tusker and have laid the We are celebrating extraordinary character, shared wins, and foundation for an exciting centenary celebration our progressive spirit
Slide 44: F22 Priorities
F22 PRIORITIES ❑ Business Recovery ❑ Margins ❑ Cost Efficiency ❑ Business Integrity ❑ People
Slide 45: Q&A Session
Q&A SESSION Eric Kiniti
Slide 46: Cautionary statement concerning forward-looking statements
Cautionary statement concerning forward-looking statements This document contains ‘forward-looking’ statements. These statements can be identified by the fact that they do not relate only to historical or current facts. In particular, forward-looking statements include all statements that express fo
Slide 47: EABL: Celebrating Life
eabl: CELEBRATING LIFE
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