East African Breweries PLC · NSEKE:EABL
East African Breweries — H1 FY2007 Earnings Presentation
31 slides from East African Breweries's earnings presentation, Feb 23, 2007
Slide 1: The Growth Platform
The Growth Platform Six months to December 2006 Nairobi: 23rd February 2007
Slide 2: Business Review
Business Review Gerald Mahinda Group Managing Director
Slide 3: Economic overview
Economic overview… Kenya Uganda Tanzania GDP growth projected GDP expected to GDP growth dropped at 6%. plateau eventuated by to 5.9% due to drought Tourism, telecomms donor funding cutbacks. and its effects on power. and construction continue Range about 5.6%. Agriculture remains to lead
Slide 4: The year so far
The year so far… Strong Performance across all our markets. Strong start to the year. Put to bed new organisational design: Demand, Supply and New Sales organisation. Great execution on Demand side growing sales especially in Beer. Developing our ‘Blue Oceans’ - expanding Senator Keg footpri
Slide 5: Strong operating results
Strong operating results… Volume growth 22% Net sales increase 14% Marketing spend increase 27% Operating margin improvement 30bps Operating profit growth 15% EPS growth 11%* Unless otherwise stated, all figures are for the 6 months ended 31 December 2006 and are in organic growth.Net sales is sales
Slide 6: Our Markets [1/2]
Our Markets [1/2]… Strong performance across all our markets buoyed by the strong economies. Greater focus on priority brands drove enhanced mix and operating margin expansion. Beer growing at 23% led by Tusker, Guinness and Senator on the back of sustained marketing despite increased competit
Slide 7: Our Markets [2/2]
Our Markets [2/2]… Overall the Group grew volumes by 22%. 23% Beer growth vs. PY driven by sustained marketing around the priority brands plus a 21% increase in exports driven by enhanced focus. Spirits up 21% on the back of pack innovation of Waragi in Uganda and strong delivery by Kane Extra
Slide 8: Driving the Innovation Agenda
Driving the Innovation Agenda… Senator in a Keg posted a 139% growth has successfully driven us into segments we have not previously played in. Repositioning of Waragi through package innovation saw growth of 29%. Execution of Guinness new pack in Uganda [Genius] saw volumes lift by 26% on bac
Slide 9: Kenya
Kenya… Strong headline growth and operating leverage. Increased marketing and sales focus. Strong performance from Guinness benefiting from Guinness 17:59 campaign and Senator Keg riding on re-focus on emerging brands. Positive results from breakthrough promotion TPF on Tusker equity scores
Slide 10: Uganda
Uganda… Delivering industry leading growth in all categories. Successful in taking market share in H1. Strong Beer performance across all brands notwithstanding increase in excise tax on LRM beers. Innovation catalyst for growth in Pilsner and Waragi. Strong growth in mainstream and premium
Slide 11: Tanzania
Tanzania… Remarkable performance as we grow faster than market. Impressive market share growth at end H1. Tusker and Guinness led growth. Tusker continues its strong association with soccer. Pilsner grew 12% on the back of an entrenched national distribution. Malta continues to grow despite
Slide 12: Investing for Growth
Investing for Growth… Uganda: Key projects being undertaken - are DPVs, Mashing vessels, Keg Boy, Storage tanks, Deaeration plant, Yeast Drier. Kenya: Key projects are Kisumu line relocation, Mash filter and DPVs. Going Forward: Key projects under consideration are Kenya Beer Filters, Security
Slide 13: Foundation Work
Foundation Work… Great success in enriching people’s lives. Over 200,000 lives touched by our Water of Life program. Lives of 69 students in East Africa changed forever through our EABL Scholarship program. Environmental impact team, E-Green, formed. Trees planting programs initiated in Ngong
Slide 14: Full Year Outlook
Full Year Outlook… Performance on course for a strong year. Focus on premium and mainstream categories through high impact marketing campaigns. Positive outlook for Spirits in H2 on back of heavyweight marketing campaigns Continue to grow our exports and soft-drinks footprint. Drive our On
Slide 15: Foundation Plans for FY
Foundation Plans for FY… Enriching lives! 300,000 lives to be touched by our Water of Life program by year end. 89 students across East Africa will have their lives changed forever through our Scholarship program. The E-Green team will continue to lead execution of our environment agenda. An
Slide 16: Performance Review
Performance Review Chris Caldwell Group Commercial Director
Slide 17: Strong operating results
Strong operating results… Volume growth 22% Net sales increase 14% Marketing spend increase 27% Operating margin improvement 30bps Operating profit growth 15% EPS growth 11% Unless otherwise stated, all figures are for the 6 months ended 31 December 2006 and are in organic growth.Net sales is sales
Slide 18: Driven by our key brands
Driven by our key brands… Volume 10% Volume 30% Net sales 12% Net sales 35% Volume 28% Volume 2% Net sales 37% Net sales 11% Volume 20% Volume 6% Net sales 21% Net sales 2% Volume 4% Volume 139% Net sales 9% Net sales 164%
Slide 19: Continuing our track record
Continuing our track record… 2500 Beer Volume Evolution 2000 23% +9% 7% 000'HLs 1500 10% +12% 1000 -2% +8% 500 0 2003 2004 2005 2006 800 Spirits Volume Evolution 700 +97% 600 21% 500 000'9Lcs 400 300 84% 200 30% 7% -1% +45% 100 0 2003 2004 2005 2006
Slide 20: Of delivering results
Of delivering results… 14000 12000 Net Sales Evolution 14% +9% 10000 +16% 7% 8000 23% MKsh +9% 5% 6000 4000 -2% 2000 -2% 0 2003 2004 2005 2006 6000 PBT Evolution +10% 5000 +17% Excl. restructuring 4000 +31% 14% costs MKsh 21% 7% 3000 53% 2000 1000 0 2003 2004 2005 2006
Slide 21: In Kenya
In Kenya… Kenya • Strong volume growth across the portfolio but challenges remain in spirits: • Improved mix Volume 25% • Increased pricing Net sales 11% • Cost pressures & production challenges • Heavy marketing campaigns (Project Marketing 22% Fame) – investment skewed into H1 Operating 13% profit
Slide 22: And Uganda
And Uganda… Uganda • Strong growth leading to significant market share gains in beer & spirits • Decisive action on spirits – price Volume 12% increase - rebalanced mix & drives margin Net sales 27% • Cost pressures as in Kenya • Marketing investments in support of Marketing 17% growth • FX also an
Slide 23: And Tanzania
And Tanzania… Tanzania •All brands gaining market share •Cost pressures as per elsewhere across the region Volume 32% •Marketing investments paying off SOA 13% •Tsh devaluation causing decline income SOA 5% in TZ shs
Slide 24: The regional summary
The regional summary… Kenya Net sales 10.3bn 11% Profit Before Tax 4.3bn 13% Uganda Net sales 2.4bn 27% Profit Before Tax 0.6bn 32% Tanzania Volumes 215K 32% Share of Assoc. 0.4bn 13% Net sales are reported figures and percentage movements are organic growth.
Slide 25: A strong P&L
A strong P&L… Kshs ‘m’ H1 FY 07 H1 FY 06 •Mix & price Net Sales Revenue 12,654 11,087 improvements Cost of Sales (4,536) (4,104) driving margin Gross Profit 8,117 6,983 gains Other Operating Income 107 85 •Costs facing real Selling & Distribution costs (918) (721) pressure: Administrative Expenses (
Slide 26: With a much better shape
With a much better shape… 40 30 30 25 27% 31% 20 20 22% 15 5 10 7% 10% 14% 14% 0 10 -12% -10 5 -20 0 First half F'06 First half F'07 % Volume growth % Net sales growth % Marketing spend % Operating profit growth
Slide 27: Free cashflow increases
Free cashflow increases… •Free cash of Ksh 7.9Bn growing by 14% But… •Capex phasing – very heavily skewed into H2 •Dividend payments in F07 will show significant increase over F06 •We are starting to expand…
Slide 28: Key measures of success
Key measures of success… PBT of 5.3Bn Ksh growing 14% ROIC of 25% growing 130bps Free Cashflow of 7.9Bn Ksh 1Bn Ksh EPS of 4.57 Ksh growing 11% DPS of 2.15 Ksh growing 23% Unless otherwise stated, all figures are for the 6 months ended 31 December 2006 and are in organic growth.Net sales is sales af
Slide 29: And rewarding shareholders
And rewarding shareholders… Interim Dividend Growth Interim Dividend 2.500 + 2 9% Payment of CA GR KSh 1.4 Bn 2.000 CAGR 31% 1.500 Ksh / Share 1.000 0.500 - 2000 2001 2002 2003 2004 2005 2006 2007
Slide 30: Overall a strong first half
Overall a strong first half… Volume growth 22% Net sales increase 14% Marketing spend increase 27% Operating margin improvement 30bps Operating profit growth 15% EPS growth 11% Unless otherwise stated, all figures are for the 6 months ended 31 December 2006 and are in organic growth.Net sales is sal
Slide 31: Thank You Questions
* Thank You Qe Questions
East African Breweries — H1 FY2007 Earnings Presentation on 6ix