East African Breweries Plc · NSEKE:EABL

East African Breweries — H1 2017 Earnings Presentation

34 slides from East African Breweries's earnings presentation, 2017

  1. Slide 1: Half Year Results 2017

    CELEBRATING LIFE, EVERY DAY, EVERYWHERE HALF YEAR RESULTS 2017 YEAR ENDED DECEMBER 2016 1

  2. Slide 2: Half Year Results Briefing

    F17 H1 Commercial Review HALF YEAR Andrew Cowan RESULTS BRIEFING F17 H1 Financial Performance Gyuri Geiszl Q&A 2

  3. Slide 3: F17 Half Year Review

    F17 HALF YEAR REVIEW Andrew Cowan Group Managing Director 3

  4. Slide 4: We are clear on our ambition

    We are clear on To create the best our ambition performing, most trusted and respected consumer products company in Africa  Strengthen and accelerate our premium core brands  Win in reserve in every market  Innovate at scale to meet new consumer needs  Build and then constantly extend our advant

  5. Slide 5: Downtrading and productivity are the two main drivers of performance

    Downtrading and productivity are the two main drivers of performance vs LY Volume +5% Net sales -6% Gross profit -5% Profit from continuing operations +2% Operating cash conversion +94% 5

  6. Slide 6: Kenya flat, healthy growth in Uganda, Tanzania in decline

    Kenya flat, healthy growth in Uganda, Tanzania in decline Contribution Net sales Net sales to overall growth growth (local Key Brands EABL (KES) currency) KENYA 74% 0% 0% UGANDA 17% +7% +7% TANZANIA 9% -7% -5% SOUTH SUDAN 0% -97% -35% Total EABL 100% -6% n/a 6

  7. Slide 7: Beer in decline except for emerging; Spirits maintain a steady growth

    Beer in decline except for emerging; Spirits maintain a steady growth Premium RTD’s Mainstream Emerging Beer & RTDs -13% -11% -7 % +10% Reserve Premium Mainstream Emerging Spirits +7% +7% +31% +8% 7

  8. Slide 8: Innovation contribution is increasing

    Innovation contribution is increasing KENYA UGANDA TANZANIA +20% +31% +35% 8

  9. Slide 9: Kenya Beer decline offset by growth of Senator and spirits

    Kenya Beer decline offset by growth of -0.3%* Senator and spirits  Bottled beer volume Successful declining with slower than launch of expected recovery from Tusker Cider excise-led price increase  Senator NSV growth of +21% Reserve brands healthy growth  Spirits in double-digit growth  Mainstre

  10. Slide 10: Uganda Beer growth led by Senator Stout & Ngule

    Beer growth led by Senator Uganda Stout & Ngule, strong +7%* performance of spirits Innovation driven by Ngule and new  Double digit growth of Senator Stout Tusker Lite Successful Launch of  Strong Uganda Waragi Black Bell performance  Emerging beer growth Strong driven by Ngule performance in Sc

  11. Slide 11: Tanzania Very challenging environment drives downtrading

    Tanzania Very challenging environment -5%* drives downtrading  Continued strength of Pilsner Lager Pilsner volumes up  Serengeti brand refresh on 20th anniversary  Reserve spirits triple digit growth  RTDs are back in growth Reserve at +43% brands rapid growth 11 * Net sales growth in local curr

  12. Slide 12: Investing in our people…

    Investing in our people…  Best Employer in East Africa: Global Career Company  Top 2 in Kenya: Deloitte Best Company to Work For Survey 2016  Top 2 in Uganda Federation of Employers  Emerged top in the 2016 CIO Awards  Runners up CSR Employer of Choice: Careers in Africa Employer of Choice Awar

  13. Slide 13: Excellence awards

    Excellence awards  Diageo 2016 Brewer of the year- Kenya Breweries Limited  Excellence in Supply Chain Market of the year- Kenya Breweries Limited  2016 Operational Excellence Award- Kenya Breweries Limited  Uganda Red Card campaign wins award for protecting consumer health and safety- Uganda Br

  14. Slide 14: Investing into reputation…

    Investing into reputation…  Responsible Drinking: 30,000 people signed up to responsible drinking digital campaign  Contract farming: added +30,000 sorghum farmers in Kenya  Women Empowerment: 15000 sorghum farmers are women benefiting families and growing income  Underage Drinking: +12000 Head

  15. Slide 15: Investing into growth…

    Investing into growth… Over the last 5.5 years... KES bn C apex 32.1 Sale of assets (8.6) Net capex 23.4 Depreciation (18.3) Net investment 5.2 CAPEX  Total investment of KES 1.8bn • Brewhouse efficiency improvements: mash filter and wort recovery • Innovation: Tusker Cider & Smirnoff bottle redesi

  16. Slide 16: Thank You

    Thank You Please hold the questions to the end 16

  17. Slide 17: F17 Financial Performance

    F17 FINANCIAL PERFORMANCE Gyuri Geiszl Group Finance Director 17

  18. Slide 18: Key Highlights

    Key Highlights H1 F17 vs LY Volume +5% Net sales KES 35.2bn -6% Operating margin 27.2% +2.4ppts Profit after tax - continuing operations KES 5.6bn +2% Operating cash conversion 94% Interim dividend KES 2.0/share - 18

  19. Slide 19: Downtrading drives volume up, net sales down

    Downtrading drives volume up, net sales down H1 F17 H1 F16  Volume growth in value vs LY KES bn KES bn segments combined with decline in premium and mainstream beer Volume (M EU) 6.1 5.8 +5%  Excise increase drives Gross sales 64.0 63.7 +1% downtrading across the region  Net sales decline due to

  20. Slide 20: Volume growth in spirits and Senator in Kenya

    Volume growth in spirits and Senator in Kenya  +16% growth of Senator keg in Kenya  -16% decline in bottled beer mitigated by strong performance in spirits, up +16%  Growth in Uganda and Rwanda, decline in Tanzania and South Sudan 20

  21. Slide 21: Consumer spend on our products unchanged

    Consumer spend on our products unchanged  Positive impact of Senator keg and spirits in Kenya could not fully offset bottled beer decline  FX and downtrading in Tanzania and South Sudan impact also negative 21

  22. Slide 22: Margin improvement through Cost of sales efficiencies

    Margin improvement through Cost of sales efficiencies  Savings of KES 0.9bn and mix H1 F17 H1 F16 impact of KES 0.6bn contibuted vs LY to Cost of sales efficiencies KES bn KES bn  COGS/unit improved by 4% for Volume (mEU) 6.1 5.8 +5% Senator and by 8% for other brands due to better fixed cost abso

  23. Slide 23: Operating profit growth driven by productivity

    Operating profit growth driven by productivity H1 F17 H1 F16  Selling and distribution vs LY costs decline as a result of KES bn KES bn procurements savings of KES 0.3bn and re-phasing Gross profit 16.6 17.4 -5% of some activations to second half Selling and distribution (2.7) (3.2) -18%  Administ

  24. Slide 24: Increase in Finance costs due to low net borrowings last year

    Increase in Finance costs due to low net borrowings last year  Revenue from the sale of H1 F17 H1 F16 CGI drove higher cash vs LY KES bn KES bn balances and interest income in F16  Lower cash balances in F17 Net borrowings (25.1) (22.5) +11% H1 due to payment of special dividends in June 2016  Co

  25. Slide 25: Growth in Profit from continued operations, sale of CGI in F16

    Growth in Profit from continued operations, sale of CGI in F16 H1 F17 H1 F16 vs LY KES bn KES bn Operating profit 9.5 9.3 +3% Finance costs, net (1.5) (1.4) +11% Profit before tax 8.0 7.9 +1% Income tax expense (2.4) (2.4) 0% Profit after tax-continuing operations 5.6 5.5 +2% Profit from sale of CGI

  26. Slide 26: Decrease in Cash from operating activities

    Decrease in Cash from operating activities H1 F17 H1 F16 vs LY % KES bn KES bn Profit before tax 8.0 7.9 0.1 +1%  No significant changes in interest, Net interest paid 1.6 1.7 (0.1) tax and depreciations Depreciation and amortization 1.7 1.9 (0.2) Gain on land sale - (0.7) 0.7  Decline is driven b

  27. Slide 27: Working capital – additional improvements

    Working capital – additional improvements H1 F17 FY F16 H1 F16 FY F15 KES bn KES bn KES bn KES bn Inventories 8.5 8.1 10.1 10.7 Trade and other receivables 15.5 12.2 8.2 9.7 Trade and other payables (25.8) (22.8) (17.9) (15.2) Total working capital (1.8) (2.5) 0.3 5.2 Working capital  Further impro

  28. Slide 28: We continue to invest in our future growth

    We continue to invest in our future growth Over the last 5.5 years... KES bn C apex 32.1 Sale of assets (8.6) Net capex 23.4 Depreciation (18.3) Net investment 5.2 CAPEX  Total investment of KES 1.8bn • Brewhouse efficiency improvements: mash filter and wort recovery • Innovation: Tusker Cider & Sm

  29. Slide 29: Interim dividend

    Interim dividend F17 F16 Vs LY Interim dividend (KES per share) 2.0 2.0 - 29

  30. Slide 30: Thank You

    Thank You Please hold the questions to the end 30

  31. Slide 31: F17 Priorities

    F17 PRIORITIES Andrew Cowan Group Managing Director 31

  32. Slide 32: Priorities going forward

    Priorities going forward Opportunities for further growth  Accelerate spirits volume momentum  Recruitment and re-recruitment bottled beer consumers  Drive price advocacy  Deliver productivity initiatives  Fast track capacity investments  Development of the commercial capabilities 32

  33. Slide 33: Q & A Session

    . eabl Q &A Session } | ( oI ‘ ° : 3 ff ciskl KY 33

  34. Slide 34: 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

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