Zambrew and Natbrew brief to institutional shareholders - July 2013
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Transcript of Zambrew and Natbrew brief to institutional shareholders - July 2013
Investor Conference Call
Full year resultsTwelve months ended 31 March 2013
12 July 2013
July 2013© SABMiller plc 2013
ZAMBIA COUNTRY OVERVIEW
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• Robust GDP growth since 2000
• Four peaceful, democratic Presidential transitions since 2000
• Credit Grade:• Moody: B+• S&P: B+
• 2012 US$750mn Eurobond oversubscribed 15-fold:
• Around 425 investors took part in the issue, with 56 per cent of them from the U.S., 40 per cent from Europe, 3 per cent from Asia
July 2013© SABMiller plc 2013
Attractive economic fundamentals
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SOURCE: International Monetary Fund; McKinsey Global Institute; Economist Intelligence Unit
Total population : 14.08m
Rural /Urban : 60/40
Gender split (M/F) : 49/51
2012 GDP : US$20.8b
July 2013© SABMiller plc 2013
And set to continue looking good
2011 2012 2013 2014 2015
Real GDP growth % 6.4 7.3 7.0 7.8 7.7
Real private consumption growth
8.1 7.6 5.2 5.3 5.9
GDP per capita (US$) 1623 1820 1941 2078 2228
CPI % 6.5 6.9 6.3 6.2 6.7
US$ Exchange rate 5.001 5.17 5.55 5.77 5.8
Population (million) 13.6 13.9 14.3 14.8 15.1
Population growth % 2.1 2.8 2.8 2.8 2.8
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July 2013© SABMiller plc 2013
Good prospects for growth of the business
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Country GDP growth%
2012 GDP p/cap
Mozambique 7.5 650
Zambia 7.3 1820
Tanzania 6.8 599
Kenya 4.7 976
Zimbabwe 4.4 755
Botswana 3.8 9398
July 2013© SABMiller plc 2013
Real population growth rates of 2.8%Population growth 2010-2013
Robust GDP growth 2012 Percentage growth 7.3%
SOURCE: International Monetary Fund; McKinsey Global Institute; Economist Intelligence Unit
Age Range 2010 2020 % Growth
15-19 1.43 1.57 10%
20-24 1.24 1.41 14%
25-29 0.98 1.17 19%
Totals 3.65 4.15 14%
Demographic evolution in our favour
Zambian Breweries plc.
Full year resultsTwelve months ended 31 March 2013
12 July 2013
July 2013© SABMiller plc 2013
Operating Highlights
Good trading environment, despite increase in new regulations
Beer growth of 12% and strong market share growth underpinned by improved
execution and brand health
Soft drinks growth of 30% - affordability, availability and market development
Improved manufacturing and distribution efficiencies
Completion of the construction of the new Ndola Brewery
Successful local sourcing initiatives culminating in the approval of the Maltings
plant
Revised HR structure driving improved processes and employee engagement
Increased our total tax contribution from $95.7m to $107.7m
Investments: The Old Ndola Brewery – Built 1952
Investments: The New Ndola Brewery – Built 2012
Prepared by
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COMPETITOR LANDSCAPE
July 2013© SABMiller plc 2013
Clear Beer Competitors
Competitor Brands and Packs Pack Visuals
Kazuma
Amstel 340ml NRB
Heineken 330ml, 340ml CAN and NRB
Windhoek 330ml, 340ml, 440ml CAN and NRB
Congolese Imports
Primus 1000ml PET
Simba, 330ml CAN, 750ml RGB
Turbo King 1000ml PET
July 2013© SABMiller plc 2013
AFBs Competitors
Competitor Brands and Packs Pack Visuals
Kazuma
Hunters Gold , Dry and Lemon, 340ml, 660ml NRB
Smirnhoff Spin and Ice, 340ml NRB
DistelSavanna Light and Dry 340ml NRB
July 2013© SABMiller plc 2013
CSDs Competitors
Competitor Brands and Packs Pack Visuals
Varun Beverages Pepsi 250, 330ml CAN, 330ml PET, 350ml RGB, 1.25ml PET and 2L PET
Mirinda 250, 330ml CAN, 330ml PET, 350ml RGB, 1.25ml PET and 2L PET
7Up 250ml CAN, 330ml PET, 350ml RGB, 1.25ml PET and 2L PET
Californian Beverages
Apple-max, Frooty, Cali-Cola, Tingling Ginger, and Hubbly Bubbly (all 350ml PET)
Accacia Beverages Havanna, Lemon-mania and Tango -425ml PET
Zambian Breweries plc.
Financial PerformanceTwelve months ended 31 March 2013
July 2013© SABMiller plc 2013
Trading and Business Environment
GDP growth of +7.0% (Copper and Agriculture). CPI at 6.3%
New government - number of sudden regulatory changes
– SI 33 - Local transactions to Kwacha only – excess US$, exchange losses
– SI 23 – Alcohol packaging restrictions – RB and PET in Chibuku
– SI 64 - Trading Hours – Chibuku sales
– SI 47 – Minimum Wages
– BOZ Amendment Act 2013 – forex monitoring
Rebasing of the Kwacha by 1000 on 1 Jan 2013
CAPEX intensive year
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July 2013© SABMiller plc 2013
Trading and Business Environment – Exchange Rates
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ZMK/ZAR
ZMK/USD
Good positive pricevariance on imports
Loss on forward contracts
July 2013© SABMiller plc 2013
Financial Highlights
Beer growth of 12%, soft drink growth of 30%
Beer price increase of 7% in March 2012
Soft drink 300ml RGB price reduction of 23% in anticipation of excise
removal in March 2012
Soft drink 500ml PET price reduction of 7% due to the removal of
excise tax in March 2013
Revenue growth of 20%
Strong fixed cost controls in the business
Operating profit growth of 29%
Operating profit margin growth of 140 bps
July 2013© SABMiller plc 2013
Financial Highlights
15% reduction in interest burden
Finance costs driven up by $3.3m of exchange losses US$57m of $75m syndicated facility refinanced in February 2013
Drop in effective tax rate from 41% to 33%.
CAPEX spend of US$ 50m in line with approved budget
July 2013© SABMiller plc 2013
US$’ 000 March 13 March 12 Change %
Reported
Group revenue 220,811 183,815 20%
EBITA 44,704 34,593 29%
EBITA margin (%) 20.2 18.8 140 bps
Sales volumes (hl’000)
Total 1,922 1,623 18
Lager 1,188 1,059 12
Soft drinks 734 564 30
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Financial results – F13
July 2013© SABMiller plc 2013
US$’ 000 March 13 March 12 Change %
Group revenue 220,811 183,815 20
Gross Profit 102,706 82,152 25
Gross margin (%) 46.5 44.7 180 Bps
Distribution costs (25,998) (19,507) (33)
Admin and Other expenses (32,004) (28,052) (14)
Operating Profit 44,704 34,593 29
Finance Costs (14,367) (10,408) (38)
Profit before taxation 30,337 24,185 25
Income tax expense (9,987) (9,857) (1)
Profit for the year 20,350 14,328 42
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Income Statement
July 2013© SABMiller plc 2013
US$’ 000March 13 March 12
Goodwill and Intangible assets 14,69213,687
Property, plant and equipment 201,266174,863
Non-current assets 556 -
Current assets excluding cash 70,50253,118
Cash and cash equivalents 7,44826,834
Borrowings (61,391)(71,979)
Other current and non-current liabilities (90,546)(71,713)
Net Assets and Total Equity 142,527124,810
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Balance sheet
July 2013© SABMiller plc 2013
US$’ 000March 13
March 12
Net cash generated from operating activities 52,061 44,931
Net cash used in investing activities (50,008) (64,484)
Net cash (used in)/generated from financing activities (20,599) 50,971
Net (decrease)/increase in cash and cash equivalents (18,546) 31,418
Movement in cash and cash equivalents
Cash and cash equivalent at the beginning of the year 23,439 (10,471)
Exchange difference on opening balance (758) -
(Decrease)/Increase in cash and cash equivalents (18,546) 31,418
Exchange difference in cash and cash equivalents (3,384) 2,492
Cash and cash equivalent at end of the year
751
23,439 23
Cash flow
July 2013© SABMiller plc 2013
Interest Bearing Debt
July 2013© SABMiller plc 2013
Capital Expenditure
US$'000
Description F11 F12 F13 F14 Budget
Capacity 6,511 48,829 36,745 2,917 Continuity 6,310 14,306 10,894 21,058 Capability - 1,636 2,164 15,985
Total 12,821 64,771 49,804 39,960 Exchange rates 4.81869773 5.001 5.16802 5.55592CAPEX 12,821 64,771 49,804 39,960 EBITA 28,554 34,593 44,704 59,176 Capex as a % EBITA 44.9% 187.2% 111.4% 67.5%
July 2013© SABMiller plc 2013
Dividend recommendation
Owing to high level of debt, interest costs needing to be serviced, no dividend declaration has been recommended for 2013
Internally generated cash will mainly be used to pay down borrowings further
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2012 2013 2014US$ '000
Borrowings (71,979) (61,391) (45,178)Cash and cash equivalents 26,835 7,448 9,001
Net debt (45,145) (53,943) (36,177)
Equity 124,811 142,526
Total capital 169,955 196,470
Gearing 27% 27%
CAPEX spend (64,771) (49,804) (39,960)
Interest paid (12,899) (10,983) (7,538)
Interest burden if 50% dividend paid (702) (1,053)
July 2013© SABMiller plc 2013 27
VAT and Excise Contribution
A – Excise in March ‘09 reduced from 75% to 60% B – Excise rate reduced in April ‘10 from 60% to 40% C – Excise on soft drinks removed from 01 January 2013
A B
C
July 2013© SABMiller plc 2013
Financial outlook – current financial year
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Continued strong volume and revenue growth
Raw material input costs expected to rise in double digits - Malt
Offset to some extent by Ndola Brewery efficiencies and local
preform manufacture
Margin sacrifice for RTM advocacy – remote depots
EBITA growth – double digit
Full year CAPEX - US$ 40m – Maltings
Anticipated interest bill - US$ 7.5m
Thank you.
Q&A on Zambian Breweries plc.
National Breweries plc.
Financial PerformanceTwelve months ended 31 March 2013
July 2013© SABMiller plc 2013
Operating Highlights
Good trading environment, despite an increase in new regulations
Roll back of price in March 2012 by 18%
Beer volume growth of 34%
Launch of Chibuku Super in the second half.
Margin pressure as a result of price rollback, commodity cost
increases and the maintenance burden
Approval obtained to build new Lusaka facility
Improved HR function and processes with performance management
as the anchor
Increased our total tax contribution from $15m to $20m
Investments: The New PET Line – Installed 2012
Prepared by
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COMPETITOR LANDSCAPE
July 2013© SABMiller plc 2013
Opaque Competitors
Competitor Brands and Packs Pack Visuals
Lusaka Breweries Lusaka Beer1,000ml Carton
Nkwazi Breweries Nkwazi Beer,750ml PET1,000ml Carton
Chatbrew Chat Beer750ml PET 1,000ml Carton
National Breweries plc.
Financial PerformanceTwelve months ended 31 March 2013
July 2013© SABMiller plc 2013
Highlights
Chibuku volume growth of 34%
Revenue growth of 31%
Gross margin decline of 720bps due to;
• Price roll back of 18%
• Maize pricing 14%
Fixed cost growth of 5%
Limited operating profit decline to 8%
Chibuku PET line commissioned in October 2013
Increase in effective tax rate from 36% to 38%
July 2013© SABMiller plc 2013
US$’ 000 March 13 March 12 Change %
Reported
Group revenue 65,300 49,865 31
EBITA 10,178 11,037 (8)
EBITA margin (%) 15.6 22.1 (650) Bps
Sales volumes (hl’000)
Traditional beer 2,317 1,736 34
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Financial results – F13
July 2013© SABMiller plc 2013
US$’ 000 March 13 March 12 Change %
Group revenue 65,300 49,865 31
Gross Profit 20,675 19,405 7
Gross margin (%) 31.7 38.9 (720) Bps
Distribution costs (4,562) (2,767) (65)
Admin and Other expenses (5,935) (5,601) (6)
Operating Profit 10,178 11,037 (8)
Finance costs (42) (97) 57
Profit before taxation 10,136 10,940 (7)
Income tax expense (3,855) (3,889) (1)
Profit for the year 6,281 7,051 (11)
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Income statement
July 2013© SABMiller plc 2013
US$’ 000March 13 March 12
Property, plant and equipment 13,523 8,519
Intangible assets 270 -
Current assets excluding cash 8,859 4,884
Cash and cash equivalents 2,415 1,729
Other current and non-current liabilities (13,924) (9,547)
Net Assets and Total Equity 11,143 5,585
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Balance sheet
July 2013© SABMiller plc 2013 40
Cash Flow
US$’ 000March 13
March 12
Net cash generated from operating activities 8,297 11,308
Net cash used in investing activities (7,434) (3,423)
Net cash used in financing activities (174) (4,683)
Net increase in cash and cash equivalents 689 3,202
Movement in cash and cash equivalents
Cash and cash equivalent at the beginning of the year 1,827 (1,390)
Exchange difference on opening balance (59) -
Increase in cash and cash equivalents 689 3,202
Exchange difference in cash and cash equivalents 51 15
Cash and cash equivalent at end of the year
2,508
1,827
July 2013© SABMiller plc 2013
Capital Expenditure
USD'000
Description F12 F13 F14 Budget
Capacity 2,434 3,829 10,955 Continuity 1,129 3,235 14,137 Capability - 432 -
Total 3,563 7,496 25,092
Exchange rates 5.001 5.168 5.55592CAPEX 3,563 7,496 25,092 EBITA 11,037 10,178 Capex as a % EBITA 32.3% 73.7%
July 2013© SABMiller plc 2013
Dividend Recommendation
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National Breweries, although in a net cash position has spent funds on the Kitwe Brewery in 2013.
2014 shows an increased CAPEX spend mainly in respect of Lusaka Brewery upgrade and a move into a gearing position for the first time.
2012 2013 2014US$ '000
Borrowings - - (12,088)Cash and cash equivalents 1,729 2,415 -
Net cash/(debt) 1,729 2,415 (12,088)
Equity 5,585 11,143
Total capital 7,314 13,558
Gearing 0% 0% 43%
CAPEX spend (3,563) (7,496) (25,092)
Interest paid (46) (93) (1,490)
July 2013© SABMiller plc 2013 43
VAT and Excise Contribution
July 2013© SABMiller plc 2013
Financial outlook – current financial year
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Chibuku Kitwe Super PET line fully commissioned
Change in mix in Chibuku towards SUPER
Chibuku Lusaka rebuild and new SUPER line
Raw material input costs expected to rise in double digits – Maize
EBITA growth – double digit
Full year CAPEX – US$ 25m
Thank you.
Q&A on National Breweries plc.