C&C Group PLC · LSE:CCR
C&C — H1 2005 Earnings Presentation
33 slides from C&C's earnings presentation, Oct 11, 2004
Slide 1: First Half Results
First Half Results October, 2004
Slide 2: C&C Group - Overview
C&C Group - Overview ¾ Leading manufacturer, marketer & distributor of branded beverages & snacks ¾ Successful Initial Public Offering - May, 2004 ¾ Market cap. € 750 million; Enterprise value €1.20 billion ¾ 3 Operating Divisions • Alcohol • International Spirits & Liqueurs • Soft Drinks & Snacks 2
Slide 3: C&C Group – Earnings Profile
C&C Group – Earnings Profile ¾ EBITA by division • Alcohol 61% • Soft-drinks & Snacks 27% • International 12% ¾ EBITA by region • Ireland 83% • Northern Ireland 5% • International 12% Based on 6 months to 31 August 2004 3
Slide 4: C&C Group – Product Profile
C&C Group – Product Profile Leading market positions in Ireland Division Market Brand Approximate Market Share (1) Irish LAD Bulmers 10% Alcohol N. Ireland LAD Magners 5% Soft Drinks Incl. Club, 7UP 35% Soft & Ballygowan Drinks & Snacks Snacks Incl.Tayto 40% & King Niche positions in international g
Slide 5: First Half results - Highlights
First Half results - Highlights ¾ Turnover growth (%) +6* • Alcohol – cider + 10%* • International + 14%* ¾ Operating profit growth (%) +6* ¾ Free cash flow/EBITDA 71% ¾ Adjusted earnings per share (cent) 14.6 ¾ Interim dividend per share (cent) 5.5 * At constant fx rates 5
Slide 6: IPO - Objectives Set
IPO - Objectives Set ¾ Deliver growth 5 • Bulmers market share growth 5 • Magners growth 5 • International growth 5 ¾ Generate consistent, high levels of free cash flow 5 ¾ Attractive & progressive dividend policy 5 6
Slide 7: Finance Review
Finance Review Cac group pic
Slide 8: Financial Summary
Financial Summary Aug '04 Aug '03 Growth Excluding Exceptionals & Amortisation Note 1 €m €m Turnover 386.3 393.3 (1.8%) Operating Profit 64.2 69.3 (7.4%) Operating Profit Margin 16.6% 17.6% (1.0) Finance Costs (12.4) (26.2) (52.7%) Taxation (4.9) (6.1) (19.7%) Net profit 46.9 37.0 26.8% Note 1: Incl
Slide 9: Profit Statement
Profit Statement Aug '04 Aug '03 Growth Continuing Operations constant fx €m €m Turnover 386.3 363.4 6.3% Marketing 23.0 19.0 21.1% Marketing % of Turnover 6.0% 5.2% +0.8 Operating Profit 64.2 60.5 6.1% Operating Profit Margin 16.6% 16.6% Unch. 9
Slide 10: Alcohol
Alcohol Aug '04 Aug '03 Growth Continuing Operations constant fx €m €m Turnover 226.0 207.7 8.8% Cider Brands 111.4 100.9 10.4% Wine & Spirit Distribution 54.2 54.3 (0.2%) Wholesaling (incl Agencies) 60.4 52.5 15.0% Marketing 9.1 8.7 4.6% Marketing % of Turnover 4.0% 4.2% (0.2) Operating Profit 39.5
Slide 11: International Spirits & Liqueurs
International Spirits & Liqueurs Aug '04 Aug '03 Growth Continuing Operations constant fx €m €m Turnover 28.8 25.2 14.3% Marketing 4.4 3.7 18.9% Marketing % of Turnover 15.3% 14.7% +0.6 Operating Profit 7.7 6.2 24.2% Operating Profit Margin 26.7% 24.6% +2.1 Growth Analysis Volume Price * Internation
Slide 12: Soft Drinks & Snacks
Soft Drinks & Snacks Aug '04 Aug '03 Growth Continuing Operations constant fx €m €m Turnover 131.5 130.5 0.8% Marketing 9.5 6.5 46.2% Marketing % of Turnover 7.2% 5.0% +2.2 Operating Profit 17.0 18.0(1) (5.5%) Operating Profit Margin 12.9% 13.8% (0.9) Growth Analysis Volume Price Beverages (2.0%) 2.
Slide 13: Cash Flow
Cash Flow Aug '04 Aug '03 Growth Includes discontinued operations Excludes exceptionals €m €m EBITDA 73.2 79.0 Capital expenditure (net) (2.0) (3.1) Working capital (1.0) (1.7) Operating cash flow 70.2 74.2 (5.4%) Reorganisation (2.4) (0.2) Interest (13.5) (20.3) Tax (2.0) (5.9) Free cash flow 52.3
Slide 14: Exceptional Costs - IPO
Exceptional Costs - IPO P&L Net share P&L Total Aug'04 Premium Feb '04 €m €m €m €m Underwriting & other costs 19.8 3.4 15.3 1.1 Hedge settlement costs 4.0 4.0 Unamortised debt costs written off 5.2 5.2 Total 29.0 12.6 15.3 1.1 Less amount outstanding (5.2) Impact on net debt at Aug '04 23.8 14
Slide 15: Balance Sheet & Capital Structure
Balance Sheet & Capital Structure ¾ Balance Sheet Net debt at 1 March, 2004 (€ m) 481.1 Free cash flow in period (€ m) (52.3) Exceptional IPO costs (€ m) 23.8 Net debt at 31 August, 2004 (€ m) 452.6 ¾ Capital structure – 31 August, 2004 Net debt to total capitalisation 36% EBITDA/net interest cover
Slide 16: Earnings & Dividends
Earnings & Dividends Aug '04 Cent Earnings €m per share Reported earnings 19.9 6.2 Goodwill & exceptionals 27.0 8.4 Adjusted earnings 46.9 14.6 ¾ Attractive dividend Dividends (€ m) 17.7 Dividend per share (cent) 5.5 Pay out ratio 38% 16
Slide 17: Operating Profit – By Half Year
Operating Profit – By Half Year 2003/04 Actual (fx adjusted) International Soft Drinks & Alcohol Spirits & Liqueurs Snacks Total 1st Half 54 37 65 54 2nd Half 46 63 35 46 100 100 100 100 ¾ 2004/5 Timing Issues • Bulmers price increase • International shipments 17
Slide 18: Market & Brand Review
Market & Brand Review Cac group pic
Slide 19: Irish LAD Market
Irish LAD Market 6 Months to 3 Months to ¾ Total Market August 2004 August 2004 • Total market 550m litres: 84% (1) on-trade Overall market trend -2% -3% ¾ On-Trade trend -5% -8% • Bulmers market share (MAT) increased by 0.5 (1) points in the period +12% +12% ¾ Off-Trade trend • Bulmers market share
Slide 20: Bulmers Strategy
Bulmers Strategy ¾ Drive market share growth by: • Developing brand equity – consistent theme (naturalness, tradition and heritage) • Broader year round usage • Marketing support • Innovation • Extensive route to market 20
Slide 21: International Cider
International Cider ¾ Magners now 20% of Bulmers/Magners volume up from 15% (MAT) at February 2004 ¾ Northern Ireland – Strong growth • On-Trade LAD market c90m litres: 2% growth (1) • 40% of total Magners • Market share (on-trade) up over one percentage point to 4.7% (1) • Volume growth in period 4
Slide 22: International Cider – Contd.
International Cider – Contd. ¾ Scotland • LAD on-trade market size 280m litres • First year of roll-out • Volume well ahead of forecast • Reached 0.6% volume share of LAD on-trade market by July 2004 • Market approaching financial break-even ¾ Other Markets • Steady volume and profit growth 22
Slide 23: Wines & Spirits Market
Wines & Spirits Market ¾ Market • 7.6% decline in Irish Spirit volume (1) • 11.4% growth in Irish Wine volume (2) ¾ C&C Underperformance • Market shift to lower-priced wines (Off-Trade) • Loss of wine market share (On-Trade) to new distributors/value brands • Low financial impact/correction plan (1)
Slide 24: International
International ¾ 17% growth in shipment volumes…but soft 2003 comparisons Brand Growth Aug '04 000 c/s Carolans 12% 240 Tullamore Dew 35% 160 Others 6% 170 Total 17% 570 ¾ H2 2003/4 recovery in depletions continued in period with 6% growth: • Carolans + 2% (USA 6%) • Tullamore Dew + 15% (Europe 20%)
Slide 25: Soft Drinks Market
Soft Drinks Market (1) Categories Market Market Growth C&C Share Change (2) Component % 6 months to Aug'04 Soft drinks 78% (3%) 0.5 Water 22% 5% (5.7) Total 100% (1%) (0.7) Channels (3) On Trade 6% (9%) (1.3) Convenience grocery 40% 1% 0.6 Take home 54% (2%) (1.5) Total 100% (1%) (0.7) ¾ Growth in C
Slide 26: Snacks Market
Snacks Market ¾ Snack market returning to growth% (1) ¾ Tayto & King brands holding share at 40% (2) ¾ Increase in marketing spend - new product development - Tayto ‘Honest’ range ¾ ‘Honest’ product range boosts Tayto in market place and contributes 3% market share (1) IBEC: MAT to July –3.8%, 3 mon
Slide 27: IPO - Objectives Met
IPO - Objectives Met ¾ Deliver growth 5 • Bulmers market share growth 5 • Magners growth 5 • International growth 5 ¾ Generate consistent, high levels of free cash flow 5 ¾ Attractive & progressive dividend policy 5 27
Slide 28: Outlook
Outlook ¾ Ireland – economic outlook is positive; consumer confidence is improving Near-term Outlook ¾ Continued outperformance of LAD market Medium-term Outlook ¾ Bulmers outperformance in more stable LAD market ¾ International cider market – continued growth plan roll out ¾ International - Carolan
Slide 29: Investment Thesis
Investment Thesis ¾ Sustainable cash flow generation capability ¾ Well invested asset base ¾ Track record of growth ¾ Defensive qualities in difficult markets ¾ Proven brand management skills ¾ Extensive distribution channels - route to market 29
Slide 30: Cac group pic
Cac group pic
Slide 31: Appendix
Appendix Cac group pic
Slide 32: Turnover & Operating Profit
Turnover & Operating Profit Divisional Summary Growth Aug '04 % Aug '03 Aug '03 constant fx constant fx €m €m €m Turnover 6% 386.3 100% 363.9 363.4 Alcohol 9% 226.0 59% 205.9 207.7 International 14% 28.8 7% 28.4 25.2 Soft Drinks & Snacks 1% 131.5 34% 129.6 130.5 Operating Profit 6% 64.2 100% 62.9 60
Slide 33: Track Record of Sustained Growth
Track Record of Sustained Growth 1,000 Turnover: 18 Year CAGR: 11% 815 827 821 750 800 Turnover: € million 670 600 547 465 497 434 382 400 269 277 299 231 153 172 186 200 124 135 0 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 150 132 135 128 128 20% EBITA: 18 Year CAGR