Carlsberg As Class A · OMXCOP:CARL_A

Carlsberg As Class A — Baltic Beverages Holding (BBH) — Investor Day (March 2003)

60 slides from Carlsberg As Class A's investor day presentation, Mar 17, 2003

  1. Slide 1: Capital Markets Day St.Petersburg

    Capital Markets Day Christian Ramm-Schmidt St.Petersburg 17-18 March 2003

  2. Slide 2: Agenda

    Agenda ƒ History and Facts ƒ Strategic Approach ƒ Market Overviews ƒ Branding ƒ Packaging Development ƒ Distribution ƒ Consolidation ƒ Investments ƒ Dividends ƒ Outlook CRS/mj /mlw 11.3.03

  3. Slide 3: History and Facts

    History and Facts CRS/mj /mlw 11.3.03

  4. Slide 4: Volume Development

    Volume Development 2002 Vena (Russia) Voronezh(Russia) Irbis(Kazakhstan) 3 000 2001 2,911 Svyturys (Lithuania) 1999 Zolotoy Ural (Russia) Pikra (Russia) 2,384 2 500 1998 Lvivska Pivovarnia (Ukraine) 1997 Tula Brewing (Russia) Baltics Baltika-Don (Russia) 1,829 2 000 Utenos Alus (Lithuania) Ukraine 1

  5. Slide 5: Markets and Locations 2003

    Markets and Locations 2003 CRS/mj /mlw 11.3.03

  6. Slide 6: Ownership Structure

    Ownership Structure Scottish&Newcastle Scottish&Newcastleplc plc Carlsberg CarlsbergA/S A/S Orkla OrklaASA ASA 100% 60% 40% Oyj OyjHartwall HartwallAbp Abp Carlsberg CarlsbergBreweries BreweriesA/S A/S 50% 50% BBH BBHAB AB BALTICS BALTICS RUSSIA RUSSIA UKRAINE UKRAINE KAZAKHSTAN KAZAKHSTAN Baltika E

  7. Slide 7: Operating Profit Development (MEUR)

    Operating Profit Development (MEUR) 350 328 300 279 250 200 147 150 118 103 96 100 42 50 18 9 -0,4 -2 0,3 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 CRS/mj /mlw 11.3.03

  8. Slide 8: Key Figures (MEUR)

    Key Figures (MEUR) 2002 2001 Change 2001 2000 Change Net sales (100%) 1237.4 976.4 +26.7% 976.4 637.0 +53.3% Operating profit (100%) 327.9 274.9 +19.3% 274.9 156.6 +75.5% EBIT margin, % 26.5% 28.2% -1.7%pts 28.2% 24.6% +3.6%pts Volume (100%), m hls 29.11 23.84 +22.1% 23.84 18.29 +30.3% CRS/mj /mlw 1

  9. Slide 9: Strategic Approach

    Strategic Approach CRS/mj /mlw 11.3.03

  10. Slide 10: A Successful Strategy

    A Successful Strategy ƒ Acquire majority interests in local breweries ƒ Local brands ƒ Local management ƒ Local ownership ƒ Quality improvements ƒ Modern technology ƒ Beer of western quality ƒ Extensive personnel development ƒ Functional support from BBH in all key business areas ƒ Brands strategy w

  11. Slide 11: BBH Managerial Resources

    BBH Managerial Resources ƒ BBH philosophy: ƒ ”To build upon strong local leadership and entrepreneurial drive combined with consistent infusion of local Managers with Western business experience and education. Optimal balance between local and global.” ƒ The role of the BBH Management Team is to ini

  12. Slide 12: Day-to-day Management

    Day-to-day Management ƒ BBH chairing all Boards ƒ all strategic issues handled on Board level ƒ On-going reporting and common systems ƒ monthly financial reporting (standard) ƒ functional co-operation (logistics, marketing, HR, finance, IT, purchasing) ƒ both western and local auditors ƒ Close relat

  13. Slide 13: Market Overviews

    Market Overviews CRS/mj /mlw 11.3.03

  14. Slide 14: Russian Market Overview

    Russian Market Overview Market Marketgrowth growth(million (millionlitres) litres) The TheRussian Russianbeer beermarket, market,2002 2002 8 000 7 000 R: 19% CAG 6 000 5 000 Other 36% 4 000 3 000 2 000 1 000 0 Bravo 1998 1999 2000 2001 2002 4% Per Percapita capitaconsumption consumption(litres) (lit

  15. Slide 15: Coverage of Main Population Centres (Russia)

    Coverage of Main Population Centres (Russia) ~ 8,5 m people Vena ~ 15 m people Baltika St. Petersburg ~ 35 m people Yarpivo N.Novgorod Moscow Perm Tula ~ 20 m people Kazan Rostov-na-Donu Ekaterinburg VoronezhSamara Ufa Zolotoy Ural Baltika- Volgograd Chelyabinsk Don Krasnoyarsk ~ 15 m people Omsk ~

  16. Slide 16: Ukrainian Market Overview

    Ukrainian Market Overview Market Marketgrowth growth(million (millionlitres) litres) The TheUkraine Ukrainebeer beermarket, market,2002 2002 1 500 : 19% 1 250 CAGR Other Donetsk 17 % 1 000 10 % 750 500 250 0 Obolon BBH 1998 1999 2000 2001 2002 21 % 20 % Per Percapita capitaconsumption consumption(li

  17. Slide 17: Ukrainian Market Map

    Ukrainian Market Map Chernihiv Volyn Rivne 1.3m Sumy 1.2m Zhitomyr 1.1m 1.4m Kiev City Kharkiv 1.5m 2.6m Lviv Poltava 3.1m Kiev Lugansk Khmelnitskiy Region 1.9m 2.7m Ternopyl 2.8m Vinnytsya Cherkassy 1.7m 1.5m 1.5m Ivano 1.2m 3.8m Frankivsk Donetsk 1.9m Dnipropetrovsk 1.5m ts i Kirovohrad Zakarpatty

  18. Slide 18: Baltic Market Overview

    Baltic Market Overview Market Marketgrowth growth(million (millionlitres) litres) Estonia Estonia Latvia Latvia 600 : 12% BBH CAGR Other BBH 40% 500 Import 5 % 47 % Other Viru 5% 31 % 400 6% 300 Import 1% 200 100 Tartu Cesis 37 % 8% 0 Livu Lacple alus s 1998 1999 2000 2001 2002 9% 11 % Per Percapita

  19. Slide 19: Kazakhstan Market Potential

    Kazakhstan Market Potential Market offers strong growth and Population, mln 15 profit potential Beer consumption, ƒ 100% growth of consumption from 1999 litres per capita 20 ƒ expected to double from 20 to 40 Total market (ML) 300 litres per capita by 2007 Source: BBH, The Economist Intelligence Uni

  20. Slide 20: BBH Market Shares

    BBH Market Shares Market share Market share Market share Jan-Dec 2000 Jan-Dec 2001 Jan-Dec 2002 Saku ESTONIA 47,6 48,5 46,7 Aldaris LATVIA 46,7 44,7 39,5 Svyturus-Utenos Alus LITHUANIA 37,2 42,6 47,8 BALTICS total 42,5 44,6 45,6 SLAVUTICH Lvivska UKRAINE 16,7 18,1 20,2 Baltika Group 19,8 21,3 21,8 Y

  21. Slide 21: Market Share Development (Russia)

    Market Share Development (Russia) 1999 2000 2001 2002 BBH 21,9 26,3 28,6 32,8 35 Sun Interbrew 15,9 14,5 12,2 11,6 BBH Ochakova 6,5 7,3 7,8 8,3 30 Krasny Vostok 4,1 4,8 6,6 7,1 Bravo 1,0 2,6 3,7 4,1 Efes 0,7 2,4 2,3 2,7 25 Stepan Razin 2,8 2,8 2,5 2,6 SAB 0,8 1,8 1,8 1,9 20 15 Sun Interbrew 10 Ochak

  22. Slide 22: Market Growth (Russia)

    Market Growth (Russia) BBH has achieved close to 50% of the market growth in the last 5 years. Market growth, BBH share of growth, m hls % 1998 6.2 45% 1999 10.7 24% 2000 7.6 58% 2001 10.9 40% 2002 5.6 80% * BBH consolidated sales volumes excluding exports CRS/mj /mlw 11.3.03

  23. Slide 23: Branding

    Branding CRS/mj /mlw 11.3.03

  24. Slide 24: Brand Strategy

    Brand Strategy ƒ Strengthening market leadership ƒ Focusing on mainstream quality segment ƒ Building strong national and regional brands ƒ Building national brand portfolios ƒ Covering each consumer need segment and consumption occasion CRS/mj /mlw 11.3.03

  25. Slide 25: Brand Portfolio (Russia)

    Brand Portfolio (Russia) BALTIKA BBH Others International License Carlsberg Tuborg Local Premium Parnas Nevskoye Baltika (0, 5, 7, 8) Mainstream Baltika 3, 4, 9 Sibirskaya Legenda Zolotoy Ural Yarpivo Lower mainstream Arsenalnoye Volga Don Kupecheskoye Medovoye Uralskiy Master Economy Samara, Vorone

  26. Slide 26: Beer Market Segmentation (Russia)

    Beer Market Segmentation (Russia) BBH share of the segment Segment share of total market Bavaria, Staropramen, Heineken, Corona Extra, Foster`s 0% Import 1% Tuborg, Carlsberg Miller, Lowenbrau, Holsten, 13% License Staropramen, Efes, Stella Artois 2% Baltika 0, Baltika 2, Baltika 5, Zolotaya Bochka,

  27. Slide 27: Market Shares (Russia)

    Market Shares (Russia) Volume share of total market Key Brands MS02,% MS01,% Volume Share 1 Baltika 12,4 % 12,0 % 2 Ochakova 7,7 % 7,6 % 3 Arsenalnoye 5,3 % 4,5 % 4 Krasny Vostok* 4,5 % 4,4 % 5 Yarpivo 4,0 % 3,2 % 6 Klinskoye 3,8 % 3,9 % 7 Tolstyak 2,7 % 3,0 % 8 Stary Melnik* 2,7 % 2,3 % 9 Volga 2,6

  28. Slide 28: BBH Invested in Marketing

    BBH Invested in Marketing 2002 2001 Total Marketing 79 MEUR 36 MEUR % Net Sales 6,4 % 3,7 % Total Marketing including expenses and investments Brand marketing ATL+BTL Investments: coolers, POS-materials CRS/mj /mlw 11.3.03

  29. Slide 29: Packaging Development

    Packaging Development CRS/mj /mlw 11.3.03

  30. Slide 30: Packaging Segment Development

    Packaging Segment Development (Russia) Jan-Dec 2002/2001 BEER BEER MARKET MARKET BBH BBH SALES SALES 3% 9% 13% 8% 4% 18% 11% 4% 28% 31% 31% Can 32% Draught PET Glass Bottle 58% 56% 45% 49% BBH 01 BBH 02 Market 01 Market 02 CRS/mj /mlw 11.3.03 Source: breweries, State Statistics Committee, Business A

  31. Slide 31: Price Development by Packaging (Russia)

    Price Development by Packaging (Russia) Average Shelfprice per 0,5L / RUR RUR 20 18 18,45 18,6 16 16,5 14 13,07 13,41 12,75 12 12,07 13,02 12,97 10 10,13 10,27 9,02 8 6 4 2 0 Dec-Jan 02 Jul-Aug 02 Nov-Dec 02 Glass Can PET Total Gategory CRS/mj /mlw 11.3.03 Source:Business Analytika

  32. Slide 32: Distribution

    Distribution CRS/mj /mlw 11.3.03

  33. Slide 33: Normal Way of Evolution

    Normal Way of Evolution…. Consumer Focus Category Management Customer Focus Key Accounts Brand Building Focus AWARENESS Distribution Capability Focus AVAILABILITY Production Capacity Focus AVAILABILITY Product Quality Focus QUALITY Cost & Capital Focus AFFORDABILITY CRS/mj /mlw 11.3.03

  34. Slide 34: Baltika's Distribution Prior Rationalisation

    Baltika’s Distribution Prior Rationalisation Baltika Production Large Wholesalers Baltika Distribution Centres Local Wholesalers Retail CRS/mj /mlw 11.3.03

  35. Slide 35: Consolidation

    Consolidation CRS/mj /mlw 11.3.03

  36. Slide 36: Consolidation of Operating Structure

    Consolidation of Operating Structure TWO WAYS: 1. Based upon ownership 2. Voluntary, based upon mutual benefits BALTICS ƒ The most advanced Pan-Baltic approach in the Baltic FMCG-sector launched end 2002. ƒ Baltic management with mandatory power, Baltic Strategies, assets optimisation, in-depth benc

  37. Slide 37: Consolidation: Russia

    Cont… RUSSIA ƒ Challenges ƒ How to balance between entrepreneurial drive (maximum growth) and corporate structures? ƒ How to avoid stumbling upon lack of organisational skills in managing large corporations? ƒ BBH’s approach ƒ To gradually create corporate structures around two natural centers: ƒ Ba

  38. Slide 38: Investments

    Investments CRS/mj /mlw 11.3.03

  39. Slide 39: Investments and Sales Volumes

    Investments and Sales Volumes Accumulated investments and 1991 - 2002 accumulated financing 2002 MEUR Million litres MEUR 1 500 3 000 1 400 1 400 2 800 1 300 2 600 1 200 1 200 2 400 1 100 2 200 1 000 1 000 2 000 900 1 800 800 800 1 600 700 1 400 600 600 1 200 500 1 000 400 400 800 300 600 200 200 40

  40. Slide 40: Capex is Increasingly Market Oriented

    Capex is Increasingly Market Oriented In 2003 ƒ Investments in capacity enhancement will be reduced by 20% ƒ Investment in customer service related projects will increase by 50% ƒ Overall capex will be on lower levels in the years to come CRS/mj /mlw 11.3.03

  41. Slide 41: Dividends

    Dividends CRS/mj /mlw 11.3.03

  42. Slide 42: Dividends in the BBH Group

    Dividends in the BBH Group 90,00 86 80,00 70,00 58 60,00 53 50,00 MEUR 40,00 33 31 30,00 26 21 21 16 18 20,00 11 12 8 6 10,00 4,1 2,5 1,4 0,12 0,03 1,0 0,00 1994 1995 1996 1997 1998 1999 2000 2001 2002 EST 2003 Year Total dividend paid from subsidiaries Received by BBH AB after tax and minority CRS/

  43. Slide 43: Outlook

    BBB. BALTIC SS OLDIN BEVERAGES 4 Outlook CRS/mj /mlw 11.3.03

  44. Slide 44: Outlook: Market growth 2003

    Outlook ƒ Market growth 2003 ƒ Russia: high single digit ƒ Ukraine: double digit ƒ Baltics: single digit ƒ Kazakhstan: high growth CRS/mj /mlw 11.3.03

  45. Slide 45: BBH Ambitions

    BBH Ambitions ƒ 40% share in Russia, 30% share in Ukraine ƒ A more integrated structure ƒ As skilful and competitive at sales and marketing as we already are in production and administration ƒ Highly motivated and effective teams with little still to learn from western companies ƒ Baltika brand No.

  46. Slide 46: Beer Industry Market Shares

    Beer Industry Market Shares Volume Share 1985 USA Imports 4% Other Domestic 17 % Anheuser-Busch 35 % Pabst 2% Coors 8% Heileman 8% Miller Strohs 13 % 13 % CRS/mj /mlw 11.3.03

  47. Slide 47: Beer Industry Market Shares

    Beer Industry Market Shares Volume Share 1985 USA Imports 4% Other Domestic 17 % Anheuser-Busch 35 % Pabst 2% Coors 8% Heileman 8% Miller Strohs Russia 13 % 13 % Volume Share 2002 Imports 2% BBH 33 % Other Domestic 34 % Bravo 4% Sun Interbrew Krasny Vostok 12 % Ochakova 7% 8% CRS/mj /mlw 11.3.03

  48. Slide 48: Beer Industry Market Shares

    Beer Industry Market Shares Volume Share 1985 USA Volume Share 2001 Imports Imports 4% 11 % Other Domestic 17 % Other Domestic Anheuser-Busch 10 % 35 % Pabst 2% Anheuser-Busch Coors Coors 50 % 10 % 8% Heileman 8% Miller Miller Strohs Russia 13 % 19 % 13 % Volume Share 2002 Imports 2% BBH 33 % Other

  49. Slide 49: Beer Industry Market Shares

    Beer Industry Market Shares Volume Share 1985 USA Volume Share 2001 Imports Imports 4% 11 % Other Domestic 17 % Other Domestic Anheuser-Busch 10 % 35 % Pabst 2% Anheuser-Busch Coors Coors 50 % 10 % 8% Heileman 8% Miller Miller Strohs Russia 13 % 19 % 13 % Volume Share 2002 Imports Volume Share 2015?

  50. Slide 50: Extra Slides

    Extra Slides CRS/mj /mlw 11.3.03

  51. Slide 51: BBH Regional Market Shares (Russia)

    BBH Regional Market Shares (Russia) Sources: Business Analitika (Total Russia, wave Nov./Dec.02) CRS/mj /mlw 11.3.03

  52. Slide 52: Baltika Market Leader in Moscow

    Baltika Market Leader in Moscow Top-Manufacturers´ Share, Dec02 vs. Dec01 100 % Moscow, Volume Shares 100 % Moscow, Value Shares 90 % 90 % 5,5% 80 % 2,6% PIT 80 % 3,0% 5,8% PIT 6,1% 7,2% 6,5% 7,3% 70 % 5,8% Bravo 70 % 7,5% 8,5% Bravo 7,8% 10,0% 60 % 10,6% 60 % SAB 9,0% SAB 11,2% 11,8% 50 % 11,3% 50

  53. Slide 53: Market Shares in St.Petersburg

    Market Shares in St.Petersburg Top-Manufacturers´ Share, Dec.02 vs. Dec.01 St.Petersburg, Volume Shares St.Petersburg, Value Shares 100 % 100 % 90 % 2,7% 90 % 3,8% 3,2% 3,0% 2,0% 2,2% Bavaria 3,8% 5,0% Bavaria 80 % 80 % 15,5% 16,0% Efes 15,7% 15,9% Efes 70 % 70 % PIT PIT 60 % 60 % Ochakova Ochakova

  54. Slide 54: Numeric Distribution of Key Brands (Russia)

    Numeric Distribution of Key Brands (Russia) 70 Bottles 60 50 40 30 20 10 0 JA02 SO02 ND02 Baltika N3 Classic Klinskoye Yarpivo Baltika N9 Strong Botchkarov Stepan Razin Stary Melnik Tolstyak Zolotaya Bochka Arsenalnoye Nevskoye CRS/mj /mlw 11.3.03 Source: Business Analytica

  55. Slide 55: Russian Market – Quarterly Growth

    Russian Market – Quarterly Growth Russian market - Quarterly growth rate vs. previous year 35% 30% 29% 25% 21% 21% 21% 20% MLitre 17% 17% 15% 15% 15% 13% 12% 10% 5% 4% 1% 0% Q1 Q2 Q3 Q4 2000 vs. 1999 2001 vs. 2000 2002 vs. 2001 CRS/mj /mlw 11.3.03

  56. Slide 56: BBH Russia - Quarterly Growth

    BBH Russia - Quarterly Growth BBH Russia - Quarterly growth rate vs. previous year 90 % 80 % 76 % 70 % 65 % 60 % 50 % MLitre 41 % 40 % 40 % 33 % 32 % 29 % 30 % 27 % 25 % 23 % 20 % 13 % 10 % 3% 0% Q1 Q2 Q3 Q4 2000 vs. 1999 2001 vs. 2000 2002 vs. 2001 CRS/mj /mlw 11.3.03

  57. Slide 57: Russian Market – Beer Volume Development

    Russian Market – Beer Volume Development Russian market - Beer volume development 2000-2002 2 200 2 091 2 028 2 019 2 000 1 811 1 800 MLitre 1 600 1 568 1 502 1 458 1 400 1 373 1 355 1 208 1 181 1 200 1 054 1 000 Q1 Q2 Q3 Q4 2000 2001 2002 CRS/mj /mlw 11.3.03

  58. Slide 58: BBH Russia – Beer Volume Development

    BBH Russia – Beer Volume Development BBH Russia - Beer volume development 2000-2002 700 650 642 630 600 570 550 500 483 488 MLitre 450 443 431 406 398 400 350 342 326 300 274 250 Q1 Q2 Q3 Q4 2000 2001 2002 CRS/mj /mlw 11.3.03

  59. Slide 59: BBH Key Managerial Resources

    BBH Key Managerial Resources BREWERY POSITION AGE EDUCATION/ CAREER Baltika MD 50 Food Technology Sales & Distrib.Director 32 MBA, Coca Cola, Philip Morris, BBH Russia Other Management < 35 (average) Yarpivo MD 63 Food Technology PIKRA MD 64 Food Technology VP 30 Western Business Courses Zolotoy Ura

  60. Slide 60: What Made the Success?

    What Made the Success? ƒ BBH was first ƒ limited resources, ƒ balanced risk taking, ”cheap approach” ƒ Unconventional strategy ƒ ”Mobilisation of local (Russian) energy” ƒ focus on local, ƒ entrepreneurial drive, ƒ balance between freedom and control, ƒ strong financial incentives (ownership) combin

Baltic Beverages Holding (BBH) — Investor Day (March 2003) on 6ix