C&C Group PLC · LSE:CCR
C&C — Davy Conference New York 2012
37 slides from C&C's conference presentation, January 2012
Slide 1: Davy Conference New York
Davy Conference New York January, 2012
Slide 2: Disclaimer
Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any shares or other securities of C&C Group plc (the "Company"). The presentation contains forward-looking statements, including statements about the Company's intentions,
Slide 3: Presentation Agenda
Presentation Agenda Business Overview C&C | Business Re-positioned Financial Overview Strategy & Outlook Appendix Slide 3
Slide 4: Business Overview
Business Overview Slide 4
Slide 5: Group Overview
Group Overview Manufacturer, marketer and distributor of branded Long Alcohol Drinks (“LAD”) World’s #2 cider producer #1 premium cider brand in Ireland & the UK #2 and #3 cider brands in the United States Scotland’s #1 LAD brand Premium positioning in cider: a growing beverage category
Slide 6: C&C | Strong Brand Portfolio
C&C | Strong Brand Portfolio Principal Cider Brands Beer Other Assets Scotland • Wellpark brewery Non-exclusive on-trade • Advances to customers distribution rights • Tennent’s wholesale Northern • Advances to customers Ireland Packaged Non-transnational on- and off-trade Republic of On- and Non-tra
Slide 7: Geographic Presence
Geographic Presence Northern Ireland Scotland Magners, Tennent’s & 3rd Party Brands Magners, Tennent’s & 3rd Party Brands 2010/11 FY | 16% of Net revenue; 10% of EBIT 2010/11 FY | 59% of Revenue; 43% of EBIT* Clonmel Facility Wellpark Facility Shepton Mallet Facility Republic of Ireland England & Wa
Slide 8: Republic of Ireland | Cider
Republic of Ireland | Cider ROI | On & Off Trade – Rolling MAT Volume Movement (%) for Bulmers and LAD category Source: ACNielsen Data to August 2011 Slide 8
Slide 9: Great Britain | Cider
Great Britain | Cider GB* | On & Off Trade – Rolling MAT Volume Movement (%) for Magners and Cider category Source: ACNielsen & CGA Data to 6 August 2011 *Great Britain (‘GB’) includes Scotland, England and Wales Slide 9
Slide 10: International Cider Markets
International Cider Markets ROI 0.7m HLs UK Rest of World 9.5m HLs 7.0m HLs Category Growth forecast: +5% to 10% pa Category Growth forecast: +10% to 20% pa Source: Euromonitor & Company Estimates (2010) HLs: Hectolitres Slide 10
Slide 11: Business Re-positioned
Business Re-positioned Slide 11
Slide 12: 2008 to 2011 | 3 Year Turnaround
2008 to 2011 | 3 Year Turnaround ▶ Stabilise Magners declining at c. 16% per annum in 2008 ▶ Consolidate ‘Mono Brand’ exposure ▶ Transform Market Risk exposure Slide 12
Slide 13: C&C Re-positioned | Stabilise
C&C Re-positioned | Stabilise Ireland New pricing on Bulmers pint bottle and Bulmers draught Launch of Bulmers Pear, Bulmers Berry and new advertising Two operational cost reduction programmes Hold earnings Great Britain New Magners advertising Launch of Magners Pear, Magners Golden Draught and Magn
Slide 14: C&C Re-positioned | Consolidate
C&C Re-positioned | Consolidate Stabilise and consolidate position as LAD focused business in core markets Focus on a cider led LAD strategy Deleverage and reduce exposure to banks 3 Transformational Transactions Acquisition of Tennent's and Gaymers for €268.6 million Disposal of Spirits &
Slide 15: C&C Re-positioned | Transform
C&C Re-positioned | Transform Accelerate internationalisation of cider New long term partnership arrangements in Australia & Canada Investment in US sales & marketing infrastructure Acquisition of Hornsby’s, number 2 domestic US cider brand C&C becomes the number 2 cider company with an es
Slide 16: 3 Year Transformation
3 Year Transformation Business position strengthened in core markets Operating cost base reduced; well-invested asset base Broader portfolio of cider and beer brands Continuing innovation Significantly enhanced and growing international business Consistently strong cash flow generation
Slide 17: Financial Overview
Financial Overview Slide 17
Slide 18: 3 Year Financial Overview
3 Year Financial Overview Consistently strong cash flow generation capability Financial Year Net Revenue (i) EBITDA(ii) EBITDA (iii) Free Cash Flow FCF % of Net Debt(iii) Net Debt to €m €m Margin % (FCF) €m EBITDA €m EBITDA (iv) 2008/09 FY 415.6 119.9 28.8% 76.1 63.5% (226.2) 1.9x 2009/10 FY 362.7
Slide 19: 2011/12 H1 | Financial Highlights
2011/12 H1 | Financial Highlights Operating profit up 7.8% to €67.4m Operating margin improved by 3.1ppts to 25.1% Strong free cash flow of €71.5m (92.5% of EBITDA) Net cash surplus of €59.7m Adjusted diluted EPS increased 7.1% to 16.5 cent Dividend increase of 11% to 3.67 cent per share
Slide 20: H1 | Business Segments - Republic of Ireland
H1 | Business Segments - Republic of Ireland (ROI) | Constant Currency Cider ROI H1 Change LAD category volume decline of 2% FY12 Const Curr. Net revenue €53.2m (8.4%) Improved brand health scores Operating profit €26.3m (4.7%) Increased off trade promotional activity driving pricing Operating
Slide 21: H1 | Business Segments - Cider Great Britain
H1 | Business Segments - Cider Great Britain (GB) | Constant Currency Magners H1 Change Magners gains share in H1 FY12 Const Curr. Net revenue €63.8m (2.3%) Volume growth of 33% in multiple grocers with slight growth Operating Profit €14.8m (21.3%) in unit pricing Operating Margin 23.2% (5.6ppts
Slide 22: H1 | Business Segments - Cider Export
H1 | Business Segments - Cider Export | Constant Currency Magners Export H1 Change New long term partnership arrangements in Australia & Canada FY12 Const Curr. Expanded infrastructure in USA Net revenue €14.2m +19.3% High levels of marketing investment Operating profit €3.0m +66.7% Launch o
Slide 23: H1 | Business Segments - Beer
H1 | Business Segments - Beer | Constant Currency Tennent’s H1 Change On trade share growth in Scotland and NI FY12 Const Curr. Pursuit of value ahead of volume in the off trade Net revenue €50.9m (5.7%) Strengthening brand health scores Operating profit €12.8m +43.8% Full delivery on synerg
Slide 24: H1 | Operations
H1 | Operations Activity Increased third party contract packaging activity Relocation of Bottling line to Wellpark Brewery Outsourcing of technical services in GB Synergy plan delivery Ongoing cost and efficiency savings Managed input cost inflation to low single digit Future Focus Gro
Slide 25: Net Cash & Pension
Net Cash & Pension - Strong Free Cashflow | Strong Balance Sheet €m *Excludes fair value of swap instruments amounting to a liability of €1.5 million (February 2011: €2.0m) Defined Benefit Pension Deficit** 31 August 2010: €49.7m 28 February 2011: €15.3m 31 August 2011: €23.7m ** Deferred tax asset
Slide 26: Strategy & Outlook
Strategy & Outlook Slide 26
Slide 27: International Cider Markets
International Cider Markets ROI 0.7m HLs UK Rest of World 9.5m HLs 7.0m HLs Category Growth forecast: +5% to 10% pa Category Growth forecast: +10% to 20% pa Source: Euromonitor & Company Estimates (2010) HLs: Hectolitres Slide 27
Slide 28: Attractive global growth
Attractive global growth Official Cider category growth forecasts Million hectolires 20 19 18 17 16 15 14 13 12 11 10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Euromonitor Slide 28
Slide 29: Cider | Long term growth potential
Cider |Long term growth potential Category share of 18-24 year old Alcohol Consumption % Source: Old & New Alcovision – rolling MATs – % of total trade volume (serves) in UK Cider’s ‘share of throat’ amongst 18-24s in UK has grown steadily from 2006 onwards, whilst Lager (Draught and Bottled in part
Slide 30: International Opportunity
International Opportunity Unisex Migration to Fruitiness % Sweet Serves in Total Alcohol Consumption: Total Trade Natural Fruit Flavours 39% 30% Versatile 22% 18% Cider can capture 5% to 10% of most LAD markets 2001 2010 All Adults 18-24yr olds (Alcovision last 7 day volume total trade – defin
Slide 31: Financial & Operational Capability
Financial & Operational Capability - to fulfil long-term ambitions Opportunity & Potential Capability Debt free Long term consumer led category growth Cash generative Strength of the brands Proven M&A capability Strong market positions Integration and operational capability Experienc
Slide 32: C&C Group | Investment Thesis
C&C Group | Investment Thesis Focused LAD business with strong market positions Leading player in growing global cider category Strong earnings and consistently high cash generation Experienced management team with proven M&A, integration & operating capability Financial capacity to accele
Slide 33: Appendix
cac group ple Slide 33
Slide 34: Risk Factors
Risk Factors Competitive threat Shift from on to off-trade Cider duty risk Exchange rate risk Deteriorating business conditions in core markets Slide 34
Slide 35: 2011/12 H1 Segmental Analysis
2011/12 H1 Segmental Analysis - Constant Currency Net Revenue €m H1 2011/12 H1 2010/11 Change Cider ROI 53.2 58.1 (8.4%) Cider NI 6.8 7.0 (2.9%) Cider GB 102.3 114.0 (10.3%) Cider Export 16.0 13.5 18.5% Tennent's 50.9 54.0 (5.7%) Third party brands 39.5 37.2 6.2% Total continuing 268.7 283.8 (5.3%)
Slide 36: 2011/12 H1 Cashflow
2011/12 H1 Cashflow H1 2011/12 H1 2010/11 Change €m €m EBIT 66.8 67.9 (2%) Amortisation/depreciation 10.5 10.9 (4%) EBITDA 77.3 78.8 (2%) Net finance charges/taxation (2.1) (7.5) (72%) Changes in working capital 8.5 38.8 (78%) Exceptional items (6.7) (4.5) 49% Operating cashflow 77.0 105.6 (27%) % o
Slide 37: www.candcgroupplc.com
www.candcgroupplc.com C&C Group plc Block 71 The Plaza, Parkwest Business Park, Dublin 12 Ireland Tel: +353 1 616 1100