Britvic — FY2019 Earnings Presentation
34 slides from Britvic's earnings presentation, Nov 27, 2019
Slide 1: Britvic plc Preliminary Results 2019
Britvic plc Preliminary Results 2019 27 NOVEMBER 2019
Slide 2: Agenda
AGENDA • 2019 STRATEGIC HIGHLIGHTS • FINANCIAL PERFORMANCE REVIEW • LOOKING AHEAD • SUSTAINABLE BUSINESS BRITVIC PLC PRELIMINARY RESULTS 2019 2
Slide 3: Simon Litherland – CEO
Simon Litherland – CEO Strong performance and progress against strategy
Slide 4: Since 2013 our strategy has delivered significant results for stakeholders
SINCE 2013 OUR STRATEGY HAS DELIVERED SIGNIFICANT RESULTS FOR STAKEHOLDERS Generate International Step change Build trust and profitable growth in expansion our business respect in our our core markets capability communities FINANCIAL KPIs Revenue Margin EPS DPS TSR CAGR 3.7% + 350bps CAGR 9.2% CAGR
Slide 5: 2019 performance continues our strong track record
2019 PERFORMANCE CONTINUES OUR STRONG TRACK RECORD Despite a difficult external environment, Britvic continues to deliver value growth for shareholders: Revenue Margin Adjusted EPS DPS +1.4% +40 bps +6.2% +6.4% BRITVIC PLC PRELIMINARY RESULTS 2019 All numbers are in constant currency, excluding SDIL
Slide 6: Strong growth in GB from low and no sugar brands
STRONG GROWTH IN GB FROM OUR PORTFOLIO OF LOW AND NO SUGAR BRANDS TANGO PEPSI MAX 7UP FREE ROBINSONS • Highest RSV in 5 years • MAX the #1 cola in the • #1 Lemon & Lime brand • #1 in‐home consumed • Attracted 900k new category • Attracted 300k new soft drink shoppers • MAX Raspberry the #1 shoppers
Slide 7: Successfully accessing GB growth segments
SUCCESSFULLY ACCESSING GB GROWTH SEGMENTS REFRESH’D LIPTON ICE TEA PURDEY’S LONDON ESSENCE • #3 ready‐to‐drink • RTD Ice Tea is the fastest‐ • Offers consumers a • Range of sodas and mixers water plus brand growing segment in natural energy choice • Listed in over 1200 outlets • £9.7m retail sales v
Slide 8: Innovation remains important as consumers seek new experiences
INNOVATION REMAINS IMPORTANT AS CONSUMERS SEEK NEW EXPERIENCES % OF TOTAL REVENUE FROM OWNED‐BRAND INNOVATION • Since 2013 we have consistently invested 8.0 7.1 to realise category growth opportunities 7.0 6.3 6.0 5.4 • Stretching our core brands to capitalise on 5.0 new consumer occasions 3.9 4.0 4
Slide 9: BCP – a platform for sustainable growth
BCP – A PLATFORM FOR SUSTAINABLE GROWTH ADDITIONAL INCREASED PRODUCTION LOWER ENVIRONMENTAL CAPACITY FLEXIBILITY EFFICIENCY COST BENEFITS A 15% return purely from cost savings BRITVIC PLC PRELIMINARY RESULTS 2019 9
Slide 10: Brazil continues to evolve and grow
BRAZIL CONTINUES TO EVOLVE AND GROW • Rejuvenating the concentrates category • Expanding distribution and range of core brands • Accelerating the growth of Fruit Shoot through new 150ml pack format • Expanding into new segments eg. tea and coconut water • Utilising ‘Be Ingredient’ for the benefit of
Slide 11: Sharpening our investment choices for future growth
SHARPENING OUR INVESTMENT CHOICES FOR FUTURE GROWTH FRANCE • Private label juice not a strategic priority so we are in exclusive discussions to exit • Allows us to simplify the business, and focus on our brand portfolio • Resulting business will be smaller but higher margin USA • Unable to find path
Slide 12: Joanne Wilson – Chief Financial Officer
Joanne Wilson – Chief Financial Officer A robust financial performance in an uncertain environment
Slide 13: A robust financial performance
A ROBUST FINANCIAL PERFORMANCE Metric Reported % Adjusted % Revenue £1,545.0m 2.8% 1.4% Adjusted EBIT £214.1m 3.9% 4.4% Adjusted EBIT Margin 13.9% +20bps +40bps Adjusted EPS 59.8p +6.2% Dividend per share 30.0p +6.4% Adjusted Net Debt/EBITDA 2.1x 0.1x Adjusted Free Cashflow £116.0m +£51.0m. Adjusted
Slide 14: Business unit highlights: GB and Ireland
BUSINESS UNIT HIGHLIGHTS GB STILLS GB CARBS TOTAL GB IRELAND Volume (4.1)% 0.5% (0.5)% (4.2)% ARP per litre 4.5% 4.7% 4.6% 3.9% Revenue 0.4% 5.2% 3.6% (1.6)% Brand contribution 3.3% 2.9% 3.0% (2.9)% Brand margin % 120bps (90)bps (30)bps (40)bps GB IRELAND • Disciplined revenue management • Lapping s
Slide 15: Business unit highlights: France, Brazil, International
BUSINESS UNIT HIGHLIGHTS FRANCE BRAZIL INTERNATIONAL Volume (8.7)% 5.5% 13.7% ARP per litre (0.5)% 4.3% (3.1)% Revenue (9.2)% 9.9% 10.2% Brand contribution (1.7)% 20.4% 16.5% Brand margin % 250bps 200bps 110bps FRANCE BRAZIL INTERNATIONAL • Both brands and private label • Six consecutive quarters of
Slide 16: Disciplined management of fixed costs
DISCIPLINED MANAGEMENT OF FIXED COSTS % Organic Constant 2019 Exchange Rate • Favourable fixed Total A&P spend 65.9 0.2% supply chain due to lower co‐pack A&P as a % of revenue 4.4% (20)bps Non‐brand A&P 10.5 5.4% • Increased investment Fixed Supply Chain 108.0 1.8% in selling and field sales activi
Slide 17: Material improvement in FCF generation and future prospects
MATERIAL IMPROVEMENT IN FCF GENERATION AND FUTURE PROSPECTS FCF +£51M IN 2019 120.0 116.0 100.0 88.9 89.3 80.0 65.0 54.5 60.0 40.0 20.0 10.9 0.0 FCF 2014 2015 2016 2017 2018 2019 ORGANIC PROFIT REALISING BCP LOWER ADJUSTING WORKING CAPITAL GROWTH BENEFITS ITEMS EFFICIENCY BRITVIC PLC PRELIMINARY RES
Slide 18: Adjusting items
ADJUSTING ITEMS REPORTED 2019 BCP and other restructuring costs 33.0 Pension scheme costs and other 7.5 Revaluation of France assets held for sale and transactional costs 33.7 Sub‐total 74.2 Acquisition‐related amortisation (non‐cash) 10.4 TOTAL 84.6 Cash Impact 2019 31.3 Cash Impact 2020 6.1 BRITVI
Slide 19: Reporting changes
REPORTING CHANGES PERIOD TO MONTHLY IMPLEMENTATION OF IFRS16 INNOVATION • 2019 restated for • Accounting for leases • Will report Britvic modelling purposes innovation as a % of ahead of Q1 • c.£47m of lease assets and Britvic brand revenue liabilities • H1 will end 31 March, • Adopt a flexible appr
Slide 20: Disciplined approach to capital allocation
DISCIPLINED APPROACH TO CAPITAL ALLOCATION DIVIDENDS STRONG UNDERLYING FCF CONVERSION M&A Progressive dividend policy – 50% pay out ratio Value‐adding M&A STRONG UNDERLYING FCF CONVERSION DEBT CAPEX Maintain long‐term debt leverage within Investment in organic growth & innovation 1.5x to 2.5x range
Slide 21: Guidance for 2020
GUIDANCE FOR 2020 Input costs Low to mid‐single digit Capital spend £70m to £80m Adjusting items £5m to £10m Pension deficit contributions £20m contribution in December 2019 Effective tax rate 19% to 20%, subject to mix of profits Interest cost £21.5m to £22.5m, incl. IFRS16 impact Net debt to EBITD
Slide 22: 2019 financial summary
2019 FINANCIAL SUMMARY • A strong financial performance • Sixth consecutive year of earnings and dividend growth • Growth in GB, Brazil and International • Proactive action to address under‐performance in France and US multi‐pack • Disciplined cost and revenue management • Material improvement in ca
Slide 23: Simon Litherland – CEO: Looking ahead, Sustainable business
Simon Litherland – CEO • Looking ahead • Sustainable business
Slide 24: Consumers are drinking differently
IN TODAY’S FAST CHANGING WORLD, CONSUMERS ARE DRINKING DIFFERENTLY HEALTHIER DIETS & INFORMED CHOICES DIFFERENTIATED, ELEVATED EXPERIENCES ANYTIME, ANYWHERE CONVENIENCE RESPONSIBLE & SUSTAINABLE OPTIONS BRITVIC PLC PRELIMINARY RESULTS 2019 24
Slide 25: Evolving our strategy to unlock next generation growth
SO WE ARE EVOLVING OUR STRATEGY TO UNLOCK NEXT GENERATION GROWTH INNOVATE TO ACCESS NEW SPACES NEW CHANNELS & OCCASIONS FLAVOUR HEALTHIER SUSTAINABLE BUILD BILLIONS OF PACKAGING & CORE WATER MORE ELEVATED DISPENSE BRANDS OCCASIONS SUSTAINABILE SOLUTIONS BUILD ADULT PREMIUM PORTFOLIO BRITVIC PLC PREL
Slide 26: While redefining the role of each market
WHILE REDEFINING THE ROLE OF EACH MARKET INNOVATE TO ACCESS NEW SPACES LEAD MARKET GROWTH ADULT PREMIUM SOFT DRINKS FLAVOUR SUSTAINABLE BUILD BILLIONS OF PACKAGING & CORE WATER DISPENSE BRANDS OCCASIONS IMPROVE PROFITABILITY ACCELERATE AND EXPAND BUILD ADULT PREMIUM PORTFOLIO BRITVIC PLC PRELIMINARY
Slide 27: And creating lasting value
AND CREATING LASTING VALUE THROUGH: INNOVATE TO • Delivering efficiency ACCESS NEW to fuel our growth SPACES • Building capability to access new opportunities FLAVOUR SUSTAINABLE BUILD BILLIONS OF PACKAGING & CORE WATER DISPENSE BRANDS OCCASIONS • Selective M&A to access new markets or categories BU
Slide 28: Healthier people
HEALTHIER PEOPLE Year Ave. cal per serve 2013 35.0 2016 (incl. Brazil) 36.0 2018 (SIDL intro.) 31.3 2019 27.5 <30 calories per 250ml BRITVIC PLC PRELIMINARY RESULTS 2019 28
Slide 29: Healthier planet
HEALTHIER PLANET • UK Plastics Pact early signatory • Providing £5m of investment support for new rPET plant in Leeds • Supporting a well‐designed DRS • Ambitious science‐based target set, 50% direct carbon reduction by 2025 BRITVIC PLC PRELIMINARY RESULTS 2019 29
Slide 30: Summary
SUMMARY Another year of strong performance 2020 will again bring external uncertainty Soft drinks remains a resilient, growing category Britvic is well placed to capitalise on evolving market and category trends We remain committed to being a sustainable business: healthier people, healthier planet
Slide 31: Questions?
Questions?
Slide 32: Appendix
BRITVIC _ Appendix —
Slide 33: A solid financial platform underpinning our growth strategy
A SOLID FINANCIAL PLATFORM UNDERPINNING OUR GROWTH STRATEGY ▶ £545m equivalent of USPP debt (at contracted rates) ▶ £400m revolving credit facility in place to November 2021 ▶ £72m equivalent of USPP notes maturing in December 2019 ▶ Further £65m equivalent of USPP notes maturing in FY21 ▶ Plans to
Slide 34: ADR programme
ADR PROGRAMME ▶ADRs give access to cross-border market liquidity ▶Cost effective and convenient to own ▶Quoted in U$D ▶Dividends paid in U$D ▶Symbol - BTVCY ▶CUSIP - 111190104 ▶Ratio - 1ADR = 2 ORD ▶Underlying SEDOL : BON8QD5 ▶Underlying ISIN : GB00B0N8QD54 ▶Depositary : BNY MELLON BRITVIC PLC PRELI