C&c Group Plc · LSE:CCR
C&c — FY2005 Earnings Presentation
42 slides from C&c's earnings presentation, May 2005
Slide 1: Full Year Results
Full Year Results Cac group pic May, 2005
Slide 2: Contents
Contents ¾ Overview ¾ Financial Review ¾ Market & Brand Review ¾ Outlook ¾ Q&A │2
Slide 3: C&C Group - Overview
C&C Group - Overview ¾ Leading manufacturer, marketer & distributor of branded beverages & snacks ¾ Market cap. € 1 billion; enterprise value €1.45 billion ¾ 3 Operating Divisions • Alcohol • International Spirits & Liqueurs • Soft Drinks & Snacks │3
Slide 4: C&C Group – Earnings Profile
C&C Group – Earnings Profile ¾ EBITA by division International • Cider 58% Soft Drinks & Snacks • Soft-drinks & Snacks 22% • International 15% Cider • Distribution 5% Distribution ¾ EBITA by region UK Ireland Rest of • Ireland 77% Europe • UK 7% North America • Rest of Europe 8% • North America 8% B
Slide 5: Full Year Results - Highlights
Full Year Results - Highlights ¾ Turnover growth (%) +4* • Alcohol – cider + 10%* • International + 5%* ¾ Operating profit growth (%) +3* ¾ Increase in marketing investment +19% ¾ Free cash flow/EBITDA 66% ¾ Adjusted earnings per share (cent) 26.4 ¾ Dividend for year per share (cent) 13.0 * At const
Slide 6: Components of Growth
Components of Growth ¾ Components of growth 2004/05 – Increasing Bulmers share of Republic of Ireland LAD market – International cider growth – Investment led growth in International spirits & liqueurs │6
Slide 7: 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 │7
Slide 8: Business Model
Business Model Delivering earnings growth and strong cash flow Ö Leading positions in growth categories Revenue Ö Proven brand management skills Growth Ö New product/markets Sustainable growth Strong cash generation Attractive dividend stream Strong Margins Ö Fragmented customer base + Ö Extensive r
Slide 9: Finance Review
Finance Review Cac group pic
Slide 10: Financial Summary
Financial Summary 2004 as reported Feb '05 Feb '04 Growth Excluding Exceptionals & Amortisation Reported €m €m Turnover 750.4 775.0 (3.2%) Operating Profit 115.1 128.3 (10.3%) Finance Costs (21.6) (50.4) (57.1%) Taxation (8.6) (11.5) (25.2%) Earnings 84.9 66.4 27.9% │ 10
Slide 11: Financial Summary
Financial Summary 2004 Proforma(i) Feb '05 Feb '04 Growth Excluding Exceptionals & Amortisation Proforma(i) €m €m Turnover 750.4 720.2 4.2% Operating Profit 115.1 111.2 3.5% Finance Costs (21.6) (24.5) (11.8%) Taxation (8.6) (9.0) (4.4%) Earnings 84.9 77.7 9.3% (I) Continuing operations at constant
Slide 12: Operating Profit
Operating Profit Continuing Operations Feb '05 Feb '04 Growth Excluding Exceptionals & Amortisation constant fx €m €m Turnover 750.4 720.2 4.2% Marketing 46.3 39.0 18.7% Marketing % of Turnover 6.2% 5.4% 0.8 Operating Profit 115.1 111.2 3.5% Operating Profit Margin 15.3% 15.4% (0.1) │ 12
Slide 13: Divisional Analysis
Divisional Analysis ¾ Alcohol • Cider • • Distribution ¾ International Spirits & Liqueurs ¾ Soft Drinks & Snacks │ 13
Slide 14: Divisional Performance (EBITA)
Divisional Performance (EBITA) Overall € million €115.1m €111.3m 120 6.0 Distribution -20% 110 7.5 100 17.6 International +3% 17.0 90 80 25.1 Soft Drinks 27.5 70 &Snacks -9% 60 50 40 66.4 Cider +12% 30 59.3 20 10 0 2004/05 2003/04 │ 14
Slide 15: Cider
Cider Feb '05 Feb '04 Growth constant fx €m €m Turnover 212.6 193.7 9.8% Marketing 14.5 13.2 9.8% Marketing /Turnover 6.8% 6.8% +/- Operating Profit 66.4 59.3 12.0% Operating Margin 31.2% 30.6% 0.6 Growth Analysis Volume Price* Total Cider +8.7% +2.3% Bulmers +/- +3.4% Magners 61.2% (0.7%) * net of
Slide 16: Distribution
Distribution Feb '05 Feb '04 Growth constant fx €m €m Turnover 230.6 219.2 5.2% Operating Profit 6.0 7.5 (20.0%) Operating Margin 2.6% 3.4% (0.8) Growth Analysis Turnover Operating Profit Margin (% age points) Wines & Spirits 1.2% (0.1) Other 9.9% (1.3) │ 16
Slide 17: International Spirits & Liqueurs
International Spirits & Liqueurs Feb '05 Feb '04 Growth Continuing Operations constant fx €m €m Turnover 68.5 65.4 4.7% Marketing 12.6 10.6 18.9% Marketing /Turnover 18.4% 16.2% +2.2 Operating Profit 17.6 16.9 4.1% Operating Margin 25.7% 25.8% (0.1) Growth Analysis Volume Price /Mix Total +7% -2.3%
Slide 18: Soft Drinks & Snacks
Soft Drinks & Snacks Feb '05 Feb '04 Growth constant fx €m €m Turnover 238.7 241.9 (1.3%) Marketing 16.9 13.3 27.1% Marketing % of Turnover 7.1% 5.5% 1.6 Operating Profit 25.1 27.5 (8.7%) Operating Profit Margin 10.5% 11.4% (0.9) Growth Analysis Volume Price Mix Beverages (2.8%) 2.3% (1.1%) Snacks 0
Slide 19: Cash Flow
Cash Flow Feb 05 Feb 04 Growth Includes discontinued operations Excludes exceptionals €m €m EBITDA 133.4 147.0 Capital expenditure (net) (5.5) (7.9) Working capital (5.1) 6.4 Operating cash flow 122.8 145.5 (15.6%) Reorganisation (4.6) (6.5) Fire Insurance Proceeds 16.0 Interest (22.0) (42.2) Tax (8
Slide 20: 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 19.6 3.3 15.2 1.1 Hedge settlement costs 3.8 3.8 Unamortised debt costs written off 5.4 5.4 Total 28.8 12.5 15.2 1.1 │ 20
Slide 21: Balance Sheet & Capital Structure
Balance Sheet & Capital Structure ¾ Balance Sheet Debt/EBITDA Net debt at 1 March, 2004 (€ m) 481.1 3.54* Free cash flow in period (€ m) (88.0) Exceptional IPO costs (€ m) 28.8 Dividends Paid/Other 19.4 Net debt at 28 February, 2005 (€ m) 441.3 3.30 ¾ Capital structure – 28 February, 2005 Net debt t
Slide 22: Earnings & Dividends
Earnings & Dividends Feb 2005 Cent per €m Share Reported Earnings (i) 84.9 26.4 Dividend Interim paid 17.7 5.5 Proposed final 24.1 7.5 41.8 13.0 Payout ratio 49% (i) Excluding goodwill and exceptionals │ 22
Slide 23: Market & Brand Review
Market & Brand Review Cac group pic
Slide 24: Irish LAD Market
Irish LAD Market Market Trends 6 Months Full Year to Feb '05 Overall Market (1.0%) (3.4%) On-Trade (7%) (9%) Off-Trade +11% +11% Bulmers Market Share Volume Increase Value (ii) Increase Share On PY Share On PY Overall (i) 9.5% +0.1 10.5% +0.7 On-Trade (ii) 9.6% +0.6 10.9% +0.7 Off-Trade (ii) 6.6% +0
Slide 25: Irish LAD Market Outlook
Irish LAD Market Outlook Smoking ban impact fully absorbed by mid-year On-trade decline expected to drop to around 3% Overall market expectation: close to flat in 2005/06 Bulmers - Targeting Volume Growth & Share Improvement Brand fundamentals strong Developing brand equity Maintain existing strateg
Slide 26: International Cider
International Cider Overall Total turnover €35m 2004/05 Volume Growth 61% Magners share of Branded Cider* Volume 2003/04 15% 2004/05 22% Last quarter 04/05 25% Geographic breakdown of volume (i) GB Northern Ireland 41% USA Great Britain 40% USA 11% E NI Europe 8% │ 26 (i) H2 2004/5 *Branded cider co
Slide 27: International Cider
International Cider Market Review Northern Ireland – LAD Market (on-trade) +3% – Magners volume growth in year 40% – Magners share of on-trade LAD market (+1.4 points) 5.4% (i) – Distribution 87%(ii) (i) MAT to Feb. ’05 – Nielsen (ii) Nielsen Feb ’05 (packaged) (WTD) │ 27
Slide 28: International Cider
International Cider Market Review Great Britain – Magners total volume growth 248% Scotland roll-out – On-trade LAD market -5% (i) – Share of on-trade LAD market 0.8% (i) – On-trade cider market +23% (i) – Share of on-trade cider market 16.6% (i) – On-trade distribution 59% (ii) – Profit positive in
Slide 29: Distribution
Distribution Market (Wine & Spirits) – 3% Decline in Irish spirit volume (i) – 9% Growth in Irish wine volume (ii) C&C Performance – Market shift to lower-priced wines (off-trade) – Business being re-configured (i) Nielsen MAT to Feb ‘05 (ii) Revenue Commissioners MAT to January 2005 │ 29
Slide 30: International Spirits & Liqueurs
International Spirits & Liqueurs Spirit & Liqueur Shipment Volumes Tullamore Dew 7% growth Brand Growth Feb.'05 c/s - Depletions growth of 6% - Slippage in Europe in H2 – market specific issue Carolans 4% 650 - Outlook good Tullamore Dew 17% 364 Others 4% 393 Total 7% 1,407 Carolans H1 16% 569 H2 2%
Slide 31: Soft Drinks Market
Soft Drinks Market Market Analysis (i) Market Market Growth C&C Share Overall YOY Share Improved in H2 Categories Component Year to Feb. '05 Change Soft Drinks 77% (4%) +/- Water 23% 6% (2.4) Outlook Total 100% (2%) (0.3) Channels (ii) - Continued Decline in Carbonates On Trade 5% (12%) (1.2) Conven
Slide 32: Snacks Market
Snacks Market Snacks Market – Volumes flat for full year (i); H1 market recovery not sustained – Price pressure remains – market price yield down 1%(i) Tayto & King Brands – Volume increased by 1% (i) – Value share held at 41% (i) – Volume share decline 1% to 39% (i) – Increase in marketing spend -
Slide 33: Outlook
Outlook Cac group pic
Slide 34: Outlook: Investing for sustainable growth
Outlook Investing for sustainable growth ¾ Economic outlook positive for Ireland ¾ Bulmers to grow volume and share ¾ Magners – Momentum in N. Ireland and Scotland – S.E. England roll-out on track ¾ Good prospects for Tullamore Dew ¾ Outlook for other divisions subdued ¾ Progressive dividend stream
Slide 35: Investment Thesis
Investment Thesis ¾ Sustainable cash flow generation capability ¾ Well invested asset base ¾ Track record of growth Sustainable growth Strong cash generation Attractive dividend stream ¾ Defensive qualities in difficult markets ¾ Proven brand management skills ¾ Extensive distribution channels - rou
Slide 36: Q&A
Q&A ¾ Annual General Meeting 8 Jul, 2005 ¾ H1 ’05/’06 pre-close August, 2005 ¾ H1 ’05/’06 period end 31 August, 2005 ¾ H1 ’05/’06 results October, 2005 │ 36
Slide 37: Appendix
Appendix Cac group pic
Slide 38: 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 39% & King Niche positions in international g
Slide 39: Bulmers – A Case Study
Bulmers — A Case Study BULMERS ~ Onin. Cac group pic
Slide 40: Cider & the Irish LAD Market
Cider & the Irish LAD Market 1990 – 2004 CAGR Cider duty Total Long Drinks Market: 2% doubled 16 Market Share by Volume (%) 14 12.7 A GR 13% C 11.8 12.2 11.6 11.5 12 10.1 10 9.0 8.1 7.1 7.5 8 5.6 6 4.9 4.3 9.8 3.7 9.2 9.2 9.5 9.6 4 2.9 8.0 6.4 5.5 2 4.5 2.3 2.7 3.2 0.9 1.1 1.6 0 Content of slides no
Slide 41: Cider – 1988
Cider – 1988 ¾ Cider Attributes • Poor image • Low price point • High alcohol content (5.5% / 6.0%) • Fringe category ¾ Issues to Address Content of slides not for reproduction • Brand image and positioning • Consumer and trade attitudes • Media perception • Strength / pricing │ 41
Slide 42: Cider – Today
Cider – Today ¾ Price premium / Image • Positioned alongside premium lager • Normal alcohol content (4.5%) ¾ Brand values • Craft, Tradition, Heritage Content of slides not for reproduction ¾ Unique pint bottle ¾ Outperformance • Beer • Competitor ciders │ 42