Guinness Nigeria PLC · NSENG:GUINNESS
Guinness Nigeria — FY2015 Earnings Presentation
42 slides from Guinness Nigeria's earnings presentation, Sep 7, 2015
Slide 1: Guinness Nigeria Full Year F15 Results
GUINNESS NIGERIA FULL YEAR F15 RESULTS 7th September 2015
Slide 2: F15 Results Briefing
F15 Results Briefing Peter Ndegwa Introduction & Performance Highlights MD/CEO Ron Plumridge Financial Performance Review Finance and Strategy Director Peter Ndegwa Performance Priorities MD/CEO Sesan Sobowale Questions & Answers Company Secretary/Corporate Relations Director 2
Slide 3: Introduction & Performance Highlights
Peter Ndegwa Introduction & Performance Highlight MD/CEO Ron Plumridge Financial Performance Review Finance and Strategy Director Peter Ndegwa Performance Priorities MD/CEO Sesan Sobowale Questions & Answers Company Secretary/Corporate Relations Director 3
Slide 4: Introduction & Bio Peter Ndegwa
Introduction & Bio Peter Ndegwa MD/CEO MD/CEO of Guinness Ghana 2011 Sales Director 2006 and Group Finance Director 2008 EABL Strategy Director EABL 2004 10 years + PricewaterhouseCoopers, East Africa & UK MBA, London Business School Bachelors, University of Nairobi Qualified Accountant 4
Slide 5: We have a very clear ambition
We have a very clear ambition To be the best performing, most trusted Since 1950…. and respected consumer products company in Nigeria Strengthen and accelerate our premium core brands Innovate at scale to meet new customer need Build and constantly extend our advantage in route to consumer D
Slide 6: The Nigerian Economy
The Nigerian Economy 9.0% GDP Growth Inflation Rates 8.0% 7.0% 6.54% 6.23% 5.94% 6.0% 5.0% 3.96% 4.0% 3.0% 2.25% 2.0% 1.0% 0.0% Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 N Official FX Exchange Rate GDP trended downwards to 2.25% in Q2 ‘15 Oil price crash drove down governments GBP revenue and spending
Slide 7: Beer and Malt market remains very competitive
Beer and Malt market remains very competitive Beer market grew by c3.7% in F15 with value segment reaching c30% Market has become increasingly competitive Consumer repertoire has grown with increasing choices The malt market grew by c2.5% but we have seen some slow down as the market is bein
Slide 8: F15 FY Performance Highlight
F15 FY Performance Highlight Strong top line performance growth Naira ‘b’ vs LY Net Sales 118.5 +9% Cost of Sales (62.6) +8% Operating Profit 15.7 -3% Profit After Tax 7.8 -19% 8
Slide 9: F15 Performance was mainly driven by
F15 Performance was mainly driven by Strong innovation with Orijin Move into value with Satzenbrau Consistent marketing investments behind our brands o Guinness ‘Made of Black’ campaign o Up weighted media investment for Orijin o New campaign for Malta Guinness Focus on supply cost reduction
Slide 10: Financial Performance Review
Peter Ndegwa Introduction & Performance Highlight MD/CEO Ron Plumridge Financial Performance Review Finance and Strategy Director Peter Ndegwa Performance Priorities MD/CEO Sesan Sobowale Questions & Answers Company Secretary/Corporate Relations Director 10
Slide 11: F15 Full Year Income Statement
F15 Full Year Income Statement F15 FY F14 FY vs LY Naira ‘b’ Naira ‘b’ Net Sales 118.5 109.2 +9% Cost of Sales (62.6) (57.9) +8% Operating Profit 15.7 16.1 -3% Profit After Tax 7.8 9.6 -19% Underlying Profit 8.6 8.4 +3% 11
Slide 12: Revenue (NSV)
Revenue (NSV) F15 FY F14 FY NSV +9% Net Sales Naira ‘b’ 118.5 Naira ‘b’ 109.2 NSV growth driven primarily by Orijin and Satzenbrau Guinness share stabilized towards the end of the year Market share growth Limited price taken in the year Distributor stock levels lower than the prior year 12
Slide 13: Cost of Sales (COGS) & Gross Profit (GP)
Cost of Sales (COGS) & Gross Profit (GP) F15 FY F14 FY COGS +8% Naira ‘b’ Naira ‘b’ Cost of Sales (62.6) (57.9) GP +9% Gross Profit 55.9 51.3 Procurement savings helped mitigate the impact of inflation and FX devaluation Strong volume growth helped improve capacity utilization Increase in locally so
Slide 14: Marketing, Distribution, Admin & One-off costs
Marketing, Distribution, Admin & One-off costs F15 FY F14 FY Naira ‘b’ Naira ‘b’ Marketing & Marketing & Distribution +5% Distribution (27.1) (25.9) Admin Expenses +35% Admin Expenses (12.7) (9.4) One-off Cost +88% One-off Cost (1.1) (0.6) Marketing and distribution costs at 22.9% of sales reduced b
Slide 15: Finance Cost & Taxation
Finance Cost & Taxation F15 FY F14 FY Finance Cost +10% Net Finance Cost Naira ‘b’ Naira ‘b’ (4.9) (4.4) Taxation +42% Taxation (3.0) (2.1) Increase in finance costs attributable to N0.5bn capitalization in F14 Average funding cost increased during the year Increase in taxation costs relates to N0.8
Slide 16: Profit After Tax (PAT)
Profit After Tax (PAT) F15 FY F14 FY PAT -19% Naira ‘b’ Naira ‘b’ Profit After Tax 7.8 9.6 Significant improvement in second half PAT at -4% compared to -32% in H1 However, we saw a slow down in activities post elections in Q4 Underlying PAT is positive 16
Slide 17: Key drivers of profit reduction
Key drivers of profit reduction were sales mix, inflation, devaluation impact on cost and investment in commercial organisation Drivers of PAT F15 vs. LY (=N= billion) 7.5 14.7 2.6 1.2 3.3 9.6 0.5 0.4 0.9 7.8 16% volume increase F14 PAT Volume Mix Other Costs Marktg & Admin exp One-off costs Interes
Slide 18: Underlying Profit
Underlying Profit F15 FY F14 FY vs LY % N'bn N'bn Profit After Tax 7.8 9.6 (1.8) -19% Adjustments for: EEG Grant - (0.7) Exceptional Costs 1.1 0.6 0.5 88% Interest Capitalisation - (0.5) Total Adjustments 1.1 (0.6) Tax on Adjustments (0.3) 0.2 Tax Incentives - (0.8) Underlying Profit After Tax 8.6 8
Slide 19: Gearing
Gearing F15 FY F14 FY Gearing -35% % % Gearing 43 78 Significant reduction in borrowings from N35bn to N21bn Average working capital from 10% in F14 to 7% in F15 Balance Sheet is strong 19
Slide 20: Balance Sheet FY F15
Balance Sheet FY F15 30 Jun' 30 Jun' 2015 2014 Change N'bn N'bn N'bn Non-current assets 88.7 91.5 (2.8) Inventories 10.8 13.5 (2.7) Receivables + Prepayments 17.0 21.1 (4.1) Cash 5.8 6.3 (0.5) Total Assets 122.2 132.3 (10.1) Equity 48.3 45.1 3.3 Non-current liabilities 27.8 43.0 (15.2) Current liabi
Slide 21: Proposed Dividend
Proposed Dividend Kobo per Share (K/S) F15 FY F14 FY Dividend flat K/S K/S Dividend 320 320 Board is recommending an unchanged dividend per share equal to 62% of distributable profit 21
Slide 22: Performance Priorities
Peter Ndegwa Introduction & Performance Highlight MD/CEO Ron Plumridge Financial Performance Review Finance and Strategy Director Peter Ndegwa Performance Priorities MD/CEO Sesan Sobowale Questions & Answers Company Secretary/Corporate Relations Director 22
Slide 23: Performance priorities
Performance priorities Strengthen and accelerate our premium core brands Innovate at scale to meet new consumer needs Build and then constantly extend our advantage in route to consumer Drive out cost to invest in growth Guarantee our plans with the right people and capabilities 23
Slide 24: Strengthen and accelerate our premium core brands
Strengthen and accelerate our premium core brands Innovate at scale to meet new consumer needs Build and then constantly extend our advantage in route to consumer Drive out cost to invest in growth Guarantee our plans with the right people and capabilities 24
Slide 25: Guinness Foreign Extra Stout
Guinness StrengthenForeign Extra and accelerate ourStout premium core brands - Beer NEW COMMUNICATIONS ENGLISH PREMIER LEAGUE – Made of Black Campaign • Live EPL broadcast matches on DSTV – 3 week and 40 Live Matches to Go – 3 TVCs / 4 Break Bumpers / 1 Promo FOOTBALL AND GUINNESS STRONG PARTNERSHIP
Slide 26: Harp Lager
Harp Lager COMMERCIAL BASICS • Distribution Drive • Visibility • Price Right
Slide 27: Malta Guinness
Malta Guinness REFRESHED OUTDOOR – 53 fresh sites pan Nigeria. MORE GOODNESS PROMO – Reach 2 million consumers. PARTICIPATION & ENGAGEMENT PLATFORM – Malta Guinness Game On TV Show MARKET SHARE STABILISED
Slide 28: Innovate at scale to meet new consumer needs
Strengthen and accelerate our premium core brands Innovate at scale to meet new consumer needs Build and then constantly extend our advantage in route to consumer Drive out cost to invest in growth Guarantee our plans with the right people and capabilities 28
Slide 29: Aggressive Innovation Pipeline
Aggressive Innovation Pipeline Pack Upgrade PU Successful Brands 2013 2014 2015 Discontinued Brands
Slide 30: Orijin & Orijin Bitters
Orijin & Orijin Bitters MEDIA – TV, Radio, Outdoor & Social Media with 3 orijinality messages – PR amplification of the Orijin World Record Drum CONSUMER ACTIVATION – Deepen cultural connections through broadcast , social media and influencers – Social Media reach greater than 70m
Slide 31: Smirnoff Ice Double Black & Guarana
Smirnoff Ice Double Black & Guarana DISTRIBUTION & VISIBILITY DRIVE – Distribution and Visibility drive in outlets LAUNCH EVENTS & SAMPLING – Launch event with 3,000 consumers on 1st May + PR – Smirnoff Industry Nite April – June: 9.5m reach on Media and 350k online followers MEDIA – Driving Awarene
Slide 32: Build our advantage in route to consumer
Strengthen and accelerate our premium core brands Innovate at scale to meet new consumer needs Build and then constantly extend our advantage in route to consumer Drive out cost to invest in growth Guarantee our plans with the right people and capabilities 32
Slide 33: Extend our Advantage in our Route to Customer
Extend our Advantage in our Route to Customer Increased our coverage by 12,000 outlets Deployed sales force technology Activation standards defined and measured to drive better execution in trade Began sales force capability initiatives Move from a shipment to depletion focused organisatio
Slide 34: Drive out cost to invest in growth
Strengthen and accelerate our premium core brands Innovate at scale to meet new consumer needs Build and then constantly extend our advantage in route to consumer Drive out cost to invest in growth Guarantee our plans with the right people and capabilities 34
Slide 35: Drive out cost to invest in growth
Drive out cost to invest in growth Increase in local sourcing of raw material from 27% to 43% Leveraging Diageo’s contracts for best value Improving plant utilisation and efficiency Support functions optimisation 35
Slide 36: Right people and capabilities
Strengthen and accelerate our premium core brands Innovate at scale to meet new consumer needs Build and then constantly extend our advantage in route to consumer Drive out cost to invest in growth Guarantee our plans with the right people and capabilities 36
Slide 37: Our People and capabilities
Our People and capabilities Simplify and streamline our business and ensure clearer accountabilities and decision making Remove complexities and unclear accountability to improve efficiency, pace and agility Position our organization for capability standards required to deliver our performance
Slide 38: And Community
And Community Our investment in our communities underpins our business objectives 25,000 Additional residents with clean, safe water and improved sanitation across 11 rural communities 1,000 Additional bartenders trained Tackling under age on responsible retailing of drinking through age alcohol bev
Slide 39: Our future
Our future The softening macroeconomic context is impacting consumer confidence and disposable income Further volatility can be expected in the FX markets which will put pressure on costs Competition will remain strong and the opportunity to take price limited Nevertheless we have strong pla
Slide 40: Strategic Priorities and Outlook
Peter Ndegwa Introduction & Performance Highlight MD/CEO Ron Plumridge Financial Performance Review Finance and Strategy Director Peter Ndegwa Strategic Priorities and Outlook MD/CEO Sesan Sobowale Questions & Answers Company Secretary/Corporate Relations Director 40
Slide 41: Questions and Answers
Questions and Answers 41
Slide 42: Important Notice
Important Notice This presentation is based on Guinness Nigeria Plc’s unaudited financial results for the full year period ended 30th June 2015. Guinness Nigeria Plc (“GN” or the “Company”) has obtained some information in this presentation from sources it believes to be reliable. Although GN has ta