Australian Vintage Ltd · ASX:AVG
Australian Vintage — FY2009 Earnings Presentation
25 slides from Australian Vintage's earnings presentation, Aug 26, 2009
Slide 1: Outperforming the Industry: 2008/09 Full Year Results
For personal use only OUTPERFORMING THE INDUSTRY 2008/09 FULL YEAR RESULTS 26 AUGUST 2009 1
Slide 2: Disclaimer
Disclaimer For personal use only The information in this presentation is general advice, given in good faith and derived from sources believed to be accurate at this date but no warranty of accuracy or reliability is given and no responsibility arising in any other way including by reason of neglige
Slide 3: Today's Agenda
Today’s Agenda For personal use only Top Line Result Market Overview Progress against Strategic Priorities FY10 Outlook Questions 3
Slide 4: Top Line Results: AVL has successfully faced up to new industry model
Top Line Results: AVL has successfully faced up to new industry model For personal use only 1. AVL sales outperform industry – Sales up 9% versus last year to $288.3 million 2. Strong progress on cash flow and debt reduction – Operating cash flow +$17.7 million – Debt (net of cash) down to $145.2 mi
Slide 5: Continuing pressure on Australian wine industry
Continuing pressure on Australian wine industry For personal use only • Supply of grapes remains above demand • Water availability and costs an ongoing issue • Australian dollar still high vs historical levels: 13 year high against £ • Purchaser power and economic conditions driving unsustainable pr
Slide 6: Long term issues and poor economics now forcing transformational change
Long term issues and poor economics now forcing transformational change For personal use only • Major wine companies reducing grape supply – Non-renewal and/or buying out grower contracts – Selling/exiting vineyards • Growers exiting, walking away or taking up Government offer • Plenty of signals to
Slide 7: AVL faced up to industry transformation starting in 2006
AVL faced up to industry transformation starting in 2006 For personal use only • Third party growers reduced from 90KT in V2006 to 42KT in V2009 and 25KT in V2011 • Exited 5 vineyards (1,400 acres) reducing intake by 7,200T of high cost grapes and decreasing cash costs of operating vineyards by over
Slide 8: AVL's overriding objective: great commercial wine company
AVL’s overriding objective to become a great commercial wine company with strong cash flow, solid production base and flexible supply For personal use only Strategic Priority 08/09 Progress 1. Grow Export Sales and Build 9Grew export sales 14% over prior year Defendable Brands versus Australian indu
Slide 9: FY09 Sales: AVL outperforms industry
FY09 Sales: AVL outperforms industry For personal use only AVL Change in Net Sales versus Prior Year 30% 25% 24% 20% 15% 14% 10% 6.2% 6% 5% 2.2% Total 0.8% Export N/A 0% AVL Aust AVL Aust AVL Total AVL -5% Aust Industry Aust Industry Export Export Export -10% Volume Value Volume Value -10% -15% Pack
Slide 10: Branded strategy on track
Branded strategy on track For personal use only Full Year Branded Sales Case Sales (‘000) Dollar Sales ($’000) % % 2007/08 2008/09 2007/08 2008/09 Change Change Export Branded 1,801 2,112 +17% 80,594 87,236 +8% Australian Branded 1,743 1,521 -13% 60,737 58,910 -3% Total 3,544 3,633 +3% 141,332 146,1
Slide 11: Export sales growth around the world and well ahead of industry
Export sales growth around the world and well ahead of Australian wine industry For personal use only Branded 156% Non Branded/Bulk AVL Net Sales Growth vs Prior Year +98% +75% 67% 62% 67% 24% +2.4% +0.4% +13% N/A N/A 8% -15% UK Europe Asia USA Canada NZ Total Change in Value of -19% -18% +14% -0.6%
Slide 12: Brand McGuigan achieved solid growth
Brand McGuigan achieved solid growth driven by focus on quality and consumer promotions For personal use only Brand McGuigan Performance Total Sales = $59m YOY Case Growth = 15% YOY Net Sales Growth = 8% Key Awards: Shortlist Chardonnay 2007: 3 trophies at 2009 International Wine Challenge Shortlist
Slide 13: Brand Nepenthe also achieved good growth
Brand Nepenthe also achieved good growth assisted by major awards in UK Decanter Wine Show For personal use only Brand Nepenthe Performance YOY Case Growth = 5% YOY Net Sales Growth = 2% Key Awards: Altitude Sauvignon Blanc 2008: Trophy for Best Aust Sauvignon Blanc under £10 at 2009 Decanter Awards
Slide 14: Solid sales growth across Australian business
Solid sales growth across Australian business For personal use only Australian Packaged Dollar Sales Growth 30% 24% 10% 6% 0.8% Total AVL Sales -3% Total AVL AVL Branded Growth in Major *Aust Wine Packaged Sales Sales Retailers Industry -10% *Source WFA, Full Year 2009 volume change 14
Slide 15: Achieving third strategy of maintaining low cost position
Achieving third strategy of maintaining low cost position and leveraging assets For personal use only • Winery costs $3.1m below last year and $6m below 2006/07 • Annualised headcount, discretionary and other costs cut by $7m – Forecasting expenses $3m lower in 09/10 and cost of goods $4m lower on a
Slide 16: Delivered strong cash flow from operating activities
Delivered strong cash flow from operating activities For personal use only $M 2008 2009 Receipts from customers 304.5 310.6 Payments to suppliers and employees (281.7) (279.3) Interest and other finance costs (11.8) (10.0) Income tax (paid) / refunded 2.2 - Total (before water and one-off items) 13.
Slide 17: AVL's restructuring almost complete and close to vision
AVL’s restructuring almost complete and close to vision For personal use only 2005/06 2009/10 Vineyard & 3rd • Tonnes crushed for wine sales 182KT • Tonnes crushed for wine sales 100KT Party Growers • Contract processing tonnes 50KT • Contract processing tonnes 50KT 232KT 150KT Wineries and • Tower
Slide 18: In summary
In summary For personal use only 1. Australian wine industry undergoing structural transformation 2. AVL has successfully faced up to new industry model 3. AVL outperforming the industry 4. AVL delivered on commitments: – sales targets – cash flow commitment – debt reduction 5. Now structurally well
Slide 19: Outlook
Outlook For personal use only • Industry remains challenging – Oversupply continuing – High Australian dollar – Competitor asset actions, including sales of written down stock • Budgeting to deliver +100% NPAT growth in FY10, before significant items and assuming no further deterioration in FX – wil
Slide 20: Questions
For personal use only 20 Questions
Slide 21: Back up
For personal use only 21 Back up
Slide 22: Sales and EBIT Summary
Sales and EBIT Summary For personal use only $M 2008 2009 Change Sales - Branded* 141.3 146.2 ↑ 3.5% - Non Branded 30.3 38.2 ↑ 26.1% - Bulk/Processing/Vineyard Income 93.4 103.9 ↑ 11.2% Total 265.0 288.3 ↑ 8.8% EBIT (before Significant Items) 19.1 16.5 ↓ 13.8% EBIT (after Significant Items) 13.1 (15
Slide 23: Segment Profitability
Segment Profitability For personal use only Results Results Change $’000 2008 2009 vs PY Branded wine division* 7,292 4,605 ↓ 37% Private Label wine division (1,071) 481 N/A Bulk wine and processing 6,830 9,676 ↑ 42% Vineyards 5,119 851 ↓ 83% Unallocated** (16,647) (182,612) Total 1,523 (166,999) Ta
Slide 24: Additional Information – Significant Items to June
Additional Information – Significant Items to 30 June For personal use only 2008 2009 $’000 $’000 Profit on disposal of winery and vineyard assets 3,054 - Stock valuation adjustment (1,759) (74,421) Impairment of property, plant & equipment - (16,209) Costs associated with the re-organisation of ove
Slide 25: Share of UK Off Premise Sales
Share of UK Off Premise Sales For personal use only Prior Year Share 24.3% 22.0% Current Year 16.3% 16.8% 15.7% 14.8% 12.3% 11.3% 10.4% 8.1% 7.3% 7.9% 6.8% 6.7% 3.3% 3.7% 3.1% 2.8% 1.4% 1.3% Australia USA France Italy South Chile Spain NZ Germany Argentina Africa Source: Off Licence News July 09 25