C&c Group Plc · LSE:CCR
C&c — H1 2005/06 Earnings Presentation
41 slides from C&c's earnings presentation, October 2005
Slide 1: First Half Results
First Half Results October, 2005 Private & Confidential
Slide 2: Contents
Contents Overview Financial Review Market & Brand Review Outlook Q&A 2
Slide 3: C&C Group - Overview
C&C Group - Overview Leading manufacturer, marketer & distributor of branded beverages & snacks Market cap. € 1.6 billion; enterprise value €2 billion 4 Reporting Divisions ¾ Cider ¾ International Spirits & Liqueurs ¾ Soft Drinks & Snacks ¾ Distribution 3
Slide 4: Half Year Results – Highlights
Half Year Results – Highlights(i) Amount Increase Turnover €420m 9%* Operating profit €68.4m 10%* Operating margin 16.3% 0.1 Marketing investment €31m 34%* Free cash flow/% of EBITDA 79% 7.0 Adjusted earnings per share 16.2 cent 14% Interim Dividend per share 6.5 cent 18% (i) All data
Slide 5: C&C Group – EBITA Profile
C&C Group – EBITA Profile EBITA by division 6 Months Change on to Aug ’05 year ago International • Cider 66% 8 Soft Drinks & Snacks • Soft-drinks & Snacks 19% (8) Cider • Intl. Spirits & Liqueurs 11% - Distribution • Distribution 4% - EBITA by region UK Ireland • Ireland 78% (5) Rest of • UK 9% 4 Eu
Slide 6: Business objectives
Business objectives Increasing strong earnings growth and cash flow Ö Bulmers outperformance of Irish LAD Ö Magners roll out in UK Growth Ö Tullamore Dew market penetration Strong EPS growth Attractive dividend stream Cash Flow Ö Strong Margins Ö High ROCE 6
Slide 7: Finance Review
Finance Review Private & Confidential
Slide 8: Financial Summary
Financial Summary Aug '05 Aug '04 Aug '04 Growth Excluding Exceptionals & Amortisation Reported (i) Proforma (ii) vs.Proforma €m €m €m Turnover 419.5 385.7 383.4 9.4% Operating Profit 68.4 62.9 62.0 10.3% Finance Costs (10.3) (12.4) (12.4) (16.9%) Taxation (6.0) (4.8) (4.8) 25.0% Earnings 52.1 45.7
Slide 9: Exceptional Costs
Exceptional Costs Re-Organisation Costs* €8.5m Asset write down €2.6m Profit on disposal of Land & Buildings (€2.8m) €8.3m * €2.1 million paid in the period 9
Slide 10: Operating Profit
Operating Profit (i) Aug '05 Aug '04 Growth constant fx €m €m Turnover 419.5 383.4 9.4% Marketing 30.5 22.8 33.8% Marketing % of Turnover 7.3% 5.9% 1.4 Operating Profit 68.4 62.0 10.3% Operating Profit Margin 16.3% 16.2% 0.1 (i) All data on IFRS basis excluding exceptional costs 10
Slide 11: Divisional Performance (EBITA)
Divisional Performance (EBITA) Overall € million €68.4m 70 2.4 Distribution -20% €62.0m 7.6 60 3.0 Int Spirits & Liqueurs +12% 6.8 13.3 50 Soft Drinks & Snacks -20% 16.6 40 Cider +27% 30 45.1 20 35.6 10 0 6 M onths - Aug '05 6 M onths - Aug '04 11
Slide 12: Cider
Cider Aug '05 Aug '04 Growth constant fx €m €m Turnover 144.5 112.7 28.2% Marketing 13.8 8.0 72.5% Marketing /Turnover 9.6% 7.1% 2.5 Operating Profit 45.1 35.6 26.7% Operating Margin 31.2% 31.6% (0.4) Growth Analysis Volume Price* Total Cider 27.0% 4.5% Bulmers 7.6% 3.2% Magners 112.4% 9.4% * net of
Slide 13: International Spirits & Liqueurs
International Spirits & Liqueurs Aug '05 Aug '04 Growth constant fx €m €m Turnover 28.9 28.0 3.2% Marketing 4.5 4.4 2.3% Marketing /Turnover 15.6% 15.7% (0.1) Operating Profit 7.6 6.8 11.8% Operating Margin 26.3% 24.3% 2.0 Growth Analysis Volume Price Brand Mix Total 1.9% 0.1% 1.3% 13
Slide 14: Soft Drinks & Snacks
Soft Drinks & Snacks Aug '05 Aug '04 Growth constant fx €m €m Turnover 129.3 130.5 (0.9%) Marketing 11.1 9.4 18.1% Marketing % of Turnover 8.6% 7.2% 1.4 Operating Profit 13.3 16.6 (19.9%) Operating Profit Margin 10.3% 12.7% (2.4) Growth Analysis Volume Price Mix/Other* Beverages (1.0%) 1.5% (0.1%) S
Slide 15: Distribution
Distribution Aug '05 Aug '04 Growth constant fx €m €m Turnover 116.8 112.2 4.1% Operating Profit 2.4 3.0 (20.0%) Operating Margin 2.1% 2.7% (0.6) Growth Analysis Turnover Operating Profit Margin (% age points) Wines & Spirits 6.0% (0.2) Other 2.5% (1.1) 15
Slide 16: Cash Flow
Cash Flow Aug '05 Aug '04 Growth €m €m EBITDA 78.5 73.1 Capital expenditure (net) (5.5) (4.4) Working capital 1.1 1.3 Share Based employee benefits 0.5 0.2 Operating cash flow 74.6 70.2 6.3% Reorganisation (2.2) (2.4) Interest (9.5) (13.5) Tax (1.0) (2.0) Free cash flow 61.9 52.3 18.4% Free cash flo
Slide 17: Balance Sheet & Capital Structure
Balance Sheet & Capital Structure Balance Sheet Debt/EBITDA Net debt at 1 March, 2005 (€ m) 441.0 3.3 Free cash flow in period (€ m) (61.9) Dividends Paid (€ m) 14.7 Other (€m) 0.5 Net debt at 31 August 2005 (€ m) 394.3 2.9 Capital structure – 31 August, 2005 Net debt to total capitalisation 21%
Slide 18: Earnings & Dividends
Earnings & Dividends Aug 2005 Cent per €m Share (i) Reported Earnings 52.1 16.2 Interim Dividend 21.1 6.5 Payout ratio 40% (i) Excluding exceptionals 18
Slide 19: Market & Brand Review
Market & Brand Review Private & Confidential
Slide 20: Irish LAD Market
Irish LAD Market H2 H1 Market Trends 04/05 05/06 Overall Market (3.4%) 0.8% On-Trade (9%) (4%) Off-Trade 11% 13% Volume Share Increase Value Share(ii) Value/Vol Bulmers Market Share in HY share ratio (i) Overall 9.8% 0.3 10.6% 1.17 On-Trade (ii) 9.7% 0.1 11.0% 1.13 Off-Trade 6.8% 0.2 8.5% 1.25 Trend
Slide 21: International Cider
International Cider Overall H1 05/06 Volume Growth 112% Geographic breakdown of volume Change EU NI H1 05/06 on Profile Year Ago USA Northern Ireland 25% (15) Great Britain 56% 30 USA 8% (9) GB Europe 11% (6) 21
Slide 22: International Cider – Market Review GB
International Cider Market Review - GB Scotland On-trade LAD market (3.5%) (i) Share of on-trade LAD market 1.7% (ii) On-trade distribution 63% (iii) London On-trade LAD market (6.9%) (i) Share of on-trade LAD market 0.4% (ii) On-trade distribution 29% (iv) (I) Nielsen - 6 Mths to July ’
Slide 23: International Cider – Market Review Northern Ireland
International Cider Market Review Northern Ireland On-trade LAD Market +/- (i) Magners volume growth 33% Share of on-trade LAD market (+0.6 pts in H1) 6.0% (ii) On-trade distribution 92%(iii) (i) Nielsen 6 mths to Aug 05 (ii) MAT to Aug. ’05 – Nielsen (iii) Nielsen Aug 05 Turnover Weighted D
Slide 24: International Spirits & Liqueurs
International Spirits & Liqueurs Shipment Depletions Brand Growth Trend Carolans flat (excl. U.K.) Half Year Carolans (8%) (3%) Tullamore Dew maintaining strong momentum Tullamore Dew 15% 13% Frangelico 6% +/- Frangelico continues to be solid Total 2% 2% 24
Slide 25: Soft Drinks & Snacks Division
Soft Drinks & Snacks Division Market Analysis C&C (i) Market Growth C&C Share Profile 6 Months to Change August 2005 MAT Soft Drinks 61% (2%) (1.3) Water 21% 15% (1.4) Total Beverage 82% 2% (ii) (1.0) (ii) Snacks 18% (4%) (iii) +/- (iii) Total 100% • Structural shifts in low growth market • Margin p
Slide 26: Outlook
Outlook Private & Confidential
Slide 27: Outlook
Outlook Investing for sustainable growth Half Year to Feb. ‘06 Cider turnover growth to be maintained Other divisions unlikely to match year ago Mid single digit Operating Profit growth Medium Term Operating Profit growth to accelerate Deleveraging FCF/EBITDA to drop Progressive divide
Slide 28: Calendar
Calendar H1 ’05/’06 period end 31 August, 2005 H1 ’05/’06 results 11 October, 2005 FY ’05/’06 pre-close February, 2006 28
Slide 29: Q&A
Q&A 29
Slide 30: Appendix
Appendix Private & Confidential
Slide 31: 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 6% Soft Drinks Incl. Club, 7UP 34% Soft & Ballygowan Drinks & Snacks Snacks Incl.Tayto & 39% King Niche positions in international g
Slide 32: Bulmers – A Case Study
Bulmers – A Case Study Private & Confidential
Slide 33: 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 34: Cider – 1988
Cider – 1988 Cider Attributes • Poor image • Low price point • High alcohol content (5.5% / 6.0%) • Fringe category Issues to Address Content of slides not for reproduction • Brand image and positioning • Consumer and trade attitudes • Media perception • Strength / pricing 34
Slide 35: Cider – Today
Cider – Today Price premium / Image • Positioned alongside premium lager • Normal alcohol content (4.5%) Brand values • Craft, Tradition, Heritage Content of slides not for reproduction Unique pint bottle Outperformance • Beer • Competitor ciders 35
Slide 36: Increasing Brand Penetration
Increasing Brand Penetration Category Consumption in Last 6 Months (Base: All beer and cider drinkers) % 1999 2000 2001 2002 2003 2004 Bulmers 12% 19% 18% 19% 20% 22% Guinness 47 44 40 39 38 32 Budweiser 37 40 37 41 40 39 Content of slides not for reproduction Heineken 37 36 34 29 33 36 Smithwicks 1
Slide 37: Recruiting New Consumers
Recruiting New Consumers Share of New Recruits 2003 / 04 2004 / 05 % Q102 Q304 Q102 Q304 Bulmers 30% 38% 44% 32% Heineken 16 12 6 18 Budweiser 32 20 26 15 Guinness 6 14 10 12 Carlsberg 5 6 1 12 Coors Light 0 3 5 2 Content of slides not for reproduction Smithwicks 6 3 2 0 Miller 2 5 3 6 Smirnoff Ice
Slide 38: Retaining Consumers
Retaining Consumers Recruiting & Retaining Bulmers Estimated Increased Penetration Market Share by Age Group Across All Age Groups 1999 2003 2004 20.0% 38.0% 1999 2003 2004 19.2% 16.1% 32% 24.0% 24.0% 24% 24% 23% 21.0% 11.0% 22% 19% 8.9% 8.3% 7.0% 6.9% 13% 10.0% 10% 5.0% 5.0% 4.6% 8% Content of slid
Slide 39: Attractive Demographic Profile
Attractive Demographic Profile Bulmers Age Profile Versus Market and Key Competitors 11% 21% 17% 33% 14% 13% 62% 31% 32% 22% 29% 31% 25% 16% 43% 36% Content of slides not for reproduction 17% 20% 21% 5% Population Bulmers Guinness Budweiser Heineken 18-24 25-34 35-44 45+ Source: MRBI 2004 Skewed tow
Slide 40: Bulmers Balanced Profile
Bulmers Balanced Profile Bulmers Socio-demographic Profile Bulmers Gender Profile Versus Market and Key Competitors Versus Market and Key Competitors 11% 8% 10% F 13% 14% 19% Female 37% 24% 25% DE 47% 28% 27% 20% 51% 62% C 22% 36% 29% 27% 29% 81% 63% Male Content of slides not for reproduction C1 53
Slide 41: C&C Group plc contact details
C&C Group plc P +353 1 616 1100 Kylemore Park F +353 1 616 1163 Dublin 10 E C&[email protected] Ireland W www.candcgroupplc.ie 41