East African Breweries Plc · NSEKE:EABL
East African Breweries — FY2017 Earnings Presentation
33 slides from East African Breweries's earnings presentation, 2017
Slide 1: Full Year Results 2017
CELEBRATING LIFE, EVERY DAY, EVERYWHERE FULL YEAR RESULTS 2017 YEAR ENDED DECEMBER 2016 1
Slide 2: Full Year Results Briefing
F17 Commercial Review Andrew Cowan F17 Financial Performance FULL YEAR Gyorgy Geiszl RESULTS BRIEFING F18 Priorities Andrew Cowan Q&A 2
Slide 3: F17 Full Year Review
F17 FULL YEAR REVIEW Andrew Cowan Group Managing Director 3
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
Slide 5: Volume up 5% driven by value beer, productivity savings increase profit
Volume up 5% driven by value beer, productivity savings increase profit vs LY Volume +5% Net Sales (like for like) +2% Gross Profit -3% Profit for the Year (continuing) +6% Operating Cash Conversion 110% Total Dividend KES 7.5/share 5
Slide 6: Strong growth of spirits and Senator negated by weak bottled beer performance
Strong growth of spirits and Senator negated by weak bottled beer performance Contribution Net Sales Net Sales to Overall Growth Growth (local Key Brands EABL (KES) currency) KENYA 75% +4% +4% UGANDA 16% +5% +7% TANZANIA 9% -13% -12% Total EABL 100% +2% n/a 6
Slide 7: Premium and mainstream beer improves in H2, spirits continues solid growth
Premium and mainstream beer improves in H2, spirits continues solid growth Premium Mainstream Value Total Beer -7% -7% +13% 0% Beer Total Reserve Premium Mainstream Value Spirits +11% +11% +29% -3% +13% Spirits 7
Slide 8: Innovation contribution is increasing further
Innovation contribution is increasing further KENYA UGANDA TANZANIA +13% +33% +5% 8
Slide 9: Kenya Beer decline mitigated by growth of Senator and spirits
Kenya Beer decline mitigated by +4%* growth of Senator and spirits Bottled beer volume declining with slower than expected recovery from Reserve excise-led price increase. brands healthy growth Senator NSV growth of +12% Successful launch of Tusker Cider Spirits in double-digit growth Mainst
Slide 10: Uganda Beer growth led by Senator and Ngule, strong spirits
Uganda Beer growth led by Senator +7%* and Ngule, strong spirits performance Innovation driven by Ngule and Double digit growth of Uganda Waragi Tusker Lite Coconut Strong Mainstream Strong Performance in Spirits performance Scotch whisky Emerging beer driven by Senator and Ngule 10 * Net sale
Slide 11: Tanzania Challenging environment, improvement in Q4
Tanzania Challenging environment, -12%* improvement in Q4 Opportunities in Spirits due to Sachet ban Pilsner volumes up Successful Launch of Mainstream beer in decline Serengeti Lite but Guinness, Pilsner, Senator and Kibo Gold are in strong growth Robust Guinness Decline of Serengeti reversed
Slide 12: Investing in our people…
Investing in our people… Top 2 in Kenya: Deloitte Best Company to Work For Survey 2016 1st runners up – Learning & Development & 2nd runners up – Work-Place Environment: Federation of Kenya Employers’ Employer of the Year Awards Best Employer in Tanzania – Training & Development: Association o
Slide 13: Excellence Awards
Excellence Awards Diageo 2016 Brewery of the Year and Operational Excellence Award - Kenya Breweries Diageo Supply Chain Excellence Market of the year for 2016 and 2017 and People Performance Award Uganda RED CARD Responsible Drinking Campaign won award for Best Concern for Consumer Issues at
Slide 14: Growing Value Together
Growing Value Together Kshs 15bn investment in new brewery in Kisumu Plant Expected to Boost Growth in sorghum demand, raising number of contracted farmers from current 30,000 to 45,000 Growing Value Together: Programme launched to highlight how business is contributing to changing lives throu
Slide 15: Thank You
Thank You Please hold the questions to the end 15
Slide 16: F17 Financial Performance
F17 FINANCIAL PERFORMANCE Gyuri Geiszl Group Finance and Strategy Director 16
Slide 17: Financial Highlights
Financial Highlights FY F17 vs LY Volume (mEU) 11.7 +5% Net sales (like for like) KES 70.2bn +2% Operating profit KES 16.5bn -2% Profit after tax - continuing operations KES 8.5bn +6% Operating Cash Conversion 110% Net debt KES 24.4bn -5% Dividend KES 7.5/Share 17
Slide 18: Value segment drives higher volume and lower net sales growth
Value segment drives higher volume and lower net sales growth Volume growth in value FY F17 FY F16 segments combined with vs LY KES bn KES bn decline in premium and mainstream beer Volume (mEU) 11.7 11.2 +5% Excise increase drives downtrading across the region, recovery from F16 excise increase
Slide 19: Growth in Senator and spirits drive performance
Growth in Senator and spirits drive performance Strong spirits and double digit Senator keg growth in Kenya Stable performance in Uganda In Tanzania double digit decline in Q1-Q3, return to growth in Q4 19
Slide 20: Cost of sales – additional savings
Cost of sales – additional savings FY F17 FY F16 COGS/unit improved by -3% vs LY driven by operational KES bn KES bn efficiencies Volume (mEU) 11.7 11.2 +5% Savings of KES 2.3bn from - local sourcing Gross sales 124.1 120.1 +3% - operational efficiencies - retendering of warehousing Excise dutie
Slide 21: Marketing efficiencies and productivity initiatives drive expenses down
Marketing efficiencies and productivity initiatives drive expenses down FY F17 FY F16 Selling and distribution vs LY KES bn KES bn costs down as a result of procurements savings and Gross profit 31.1 32.2 -3% refund from Diageo Selling & distribution (5.4) (6.1) -11% Staff costs (5.2) (6.1) -15%
Slide 22: Settlement and capital restructuring in Tanzania
Settlement and capital restructuring in Tanzania Proceedings by Fair Competition Commission closed Cost of settlement already provided for in F16, no impact on F17 financials Agreement with B shareholders to complete capital restructuring of SBL, to restore equity position and statutory profit
Slide 23: Reduced net borrowings and finance charges, funding of new brewery from debt
Reduced net borrowings and finance charges, funding of new brewery from debt Strong cash delivery drove reduction in Net FY F17 FY F16 vs LY borrowings despite higher KES ’bn’ KES ’bn’ capex spend Net finance charges decreased by -3%, effective interest rates remained Net borrowings (24.4) (25.6
Slide 24: Profit after tax (excluding CGI) up +6%
Profit after tax (excluding CGI) up +6% FY F17 FY F16 KES KES vs LY ’bn’ ’bn’ The Effective Tax Rate Operating profit 16.5 16.9 -2% reduced from 41% to 36%, still impacted by one-off Finance costs, net (3.2) (3.3) -3% tax provisions Profit before tax 13.3 13.6 -2% Income tax expense (4.8) (5.6) -1
Slide 25: Strong cash delivery with 110% OCC
Strong cash delivery with 110% OCC F17 F16 vs LY KES ’bn’ KES ’bn’ Improved planning process and forecasting Operating profit 16.5 16.9 (0.4) accuracy enables us to Depreciation and keep lower level of amortization 4.0 3.6 0.4 inventory Gain on land sale - (1.1) (1.1) Increase in Senator’s Worki
Slide 26: We continue to invest in our future growth
We continue to invest in our future growth CAPEX Total F17 investment of KES 5.7bn (F16: KES 5.0bn), new brewery in Kisumu announced Capacity expansion • KBL brewing and cooling expansion by investing in Dual Purpose Vessels (DPVs) KES 1.1bn • Additional kegging capacity: 4 Rackers and 30k keg bar
Slide 27: Total dividend unchanged from last year
Total dividend unchanged from last year F17 F16 Dividends KES/Share KES/Share Interim 2.0 2.0 Final (proposed) 5.5 5.5 7.5 7.5 Special - 4.5 Total 7.5 12.0 27
Slide 28: Trajectory improving in H2
Trajectory improving in H2 F17 H1 F16 H1 F17 H2 F16 H2 vs LY vs LY KES bn KES bn KES bn KES bn Net sales 36.9 37.5 -2% 33.3 31.2 +7% Cost of sales (20.3) (20.1) -1% (18.8) (16.4) +15% Gross margin 16.6 17.4 -5% 14.5 14.8 -2% Gross margin% 45.0% 46.5% -1.5ppt 43.6% 47.4% -3.9ppt OP% (underlying) 25.3
Slide 29: Thank You
Thank You Please hold the questions to the end 29
Slide 30: F18 Priorities
F18 PRIORITIES Andrew Cowan Group Managing Director 30
Slide 31: Priorities going forward
Priorities going forward Opportunities for further growth Accelerate spirits volume momentum Recruitment and re-recruitment bottled beer consumers Win in premium leading with Scotch Deliver productivity initiatives Fast track beer and spirits capacity investments Accelerate Pilsner 7, Zi
Slide 32: Q & A Session
. eabl Q &A Session ] | ( oI ‘ ° : 3 ff ciskl KY 32
Slide 33: 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 f
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