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Guinness Nigeria Plc HY 2014 financial results presentation

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  • 1. Guinness Nigeria Plc F14 Half-Year Results 17 February 2014
  • 2. Agenda d Introduction & Performance Review Seni Adetu, Managing Director/Chief Executive Officer Financial Performance Lisa Nichols, Finance and Strategy Director Strategic Priorities and Outlook Seni Adetu, Managing Director/Chief Executive Officer Questions & Answers Sesan Sobowale, Company Secretary/Corporate Relations Director
  • 3. H1 F14 Introduction and Performance Review Seni Adetu
  • 4. Nigeria continues to be an attractive market … The MINT (Mexico, Indonesia, Nigeria andTurkey ) economies all have very favorable demographics for at least the next 20 years, and their economic prospects are interesting. - Jim O’Neil (millions) LPA+ Adults today LPA+ adults in 10 years Nigeria 80.0 103.6 2015 elections: government spending expected to increase in the lead up to the elections and will likely result in improved discretionary income
  • 5. … but challenges remain  Power supply: Continues to be an issue but recent developments in the sector give cause for optimism as we expect to start to see a difference before the end of 2015.  Discretionary income: Removal of fuel subsidy in 2012 continues to impact consumer spending.  Security: Acts of violence and terrorism still occur in some parts of the country and this restricts economic activity in those parts. Government continues to work to bring the situation under control.  Oil revenue: The Nigerian economy is very dependent on oil revenues accounting for over 90% of export and 80% of revenues.
  • 6. Key Drivers of Performance  The half has witnessed:  Continued contraction of the beer market even though a slight improvement was reported in December 2013.  Increasing growth of the value segment.  Premium brands experienced softness in volume following price increases.  This has led to:  Weaker topline performance; and  Impacted margins negatively.  We have enhanced our ability to scale-up in the production and distribution of our value offerings especially Dubic Lager
  • 7. H1 F14 Financial Performance Lisa Nichols
  • 8. H1 F14 H1 F13 Variance Growth Nbillion Nbillion Nbillion % Net Revenue 52.8 60.9 (8.1) -13% Cost of sales (27.5) (32.6) 5.1 -16% Gross profit 25.3 28.3 (3.0) -11% Marketing, Distr. & Admin costs (17.2) (17.1) (0.2) 1% Operating profit 8.0 11.2 (3.2) -28% Finance charges (1.6) (1.8) 0.2 -9% PBT 6.4 9.4 (3.0) -32% Tax (1.4) (3.0) 1.6 -53% PAT 5.0 6.4 (1.4) -22% Comprehensive Income
  • 9. F13 H1 PAT Price increases Volume downside 2.4 0.6 Mix Reduction in other costs Marktg, distr. and admin exp Interest Tax F14 H1 PAT 6.6 1.8 0.2 0.2 1.6 5.0 6.4 Lower profit and Pioneer tax incentives Drivers of PAT F14 H1 vs. LY (=N= billion) Drivers of Profit
  • 10. H1 F14 H1 F13 Movt Nbillion Nbillion Nbillion Non-current assets 91.7 84.8 6.9 Inventories 15.7 13.0 2.6 Receivables 19.7 15.8 3.8 Cash 4.3 4.4 (0.1) Total assets 131.3 118.0 13.2 Equity (40.6) (40.5) (0.0) Non-current liabilities (23.8) (21.6) (2.2) Current liabilities (66.9) (55.9) (11.0) Total equity and liabilities (131.3) (118.0) (13.2) Financial Position
  • 11. Strategic Priorities and Outlook Seni Adetu
  • 12. Our strategic priorities Strengthen and accelerate our premium core brands Innovate at scale to meet new consumer needs Build and then constantly extend our advantage in Route to Consumer Drive out cost to invest in growth Guarantee our plans with the right people and capability
  • 13. Premium Core Guinness Harp Malta Guinness • Unveiling of the New Look of Cool (Harp New packaging) at prestigious “HARP RHYTHM UNPLUGGED” • Re-launch of the Guinness brand (Colorful world of more concert). • Guinness Football Manager. • Continued EPL sponsorship. • Associate Sponsor of Nigeria’s Got Talent reality show • New “Rise with the power of Naija” OOH Campaign Smirnoff Ice  Smirnoff brand awareness drive  Copa Lagos Beach Soccer sponsorship
  • 14. Alvaro Masters Choice Locally produced premium spirit with whisky flavors  Launched November 2013 Orijin Bitters Alvaro – an adult premium non-alcoholic malt based drink  Commercial can launch October 2013  Bottle launch to follow Locally produced premium spirit with herbal extract  Launched November 2013 Orijin Orijin to celebrates the vibrancy of African culture. Made with the flavour of African Herbs and fruits with a modern touch  Launched in August 2013 Innovation
  • 15. Route to Consumer Increase availability of our brands and share in key outlets • Substantially increased direct coverage • Increase in sales people • Pilot further increases in Lagos Increase availability in rural areas where we are relatively weak • Over 200 Guinness Distribution Centers • Substantial rise in number of distributors • Dedicated teams driving distribution / activation Increase our share in the growing off trade channel • Dedicated Key Account Structure for modern retail • Piloting alternative off trade route to consumer Improve the efficiency & effectiveness of our sales organization • Improving the efficiency of our distributors sales force • Sales Academy Sufficient distributor funding to support our growth ambition • Distributor financing scheme • New Credit Terms Outlet Coverage Rural Distribution OffTrade Management Sales Effectiveness Working Capital
  • 16. Going forward  We are conducting a pricing review on key brands in line with market realities.  We plan to sustain A&P investments behind our brands.  We expect to begin to see some of the benefits of our RtC transformation work.  We expect that the re-launch of Guinness and Harp will drive increased uptake.  We will continue to focus on expanding our innovation footprints with existing brands and new launches.  Our focus on improving the capability of our sales force will continue  We expect all this to lead to some topline improvement in the second half of the financial year.  We are confident that our focus on our strategic priorities will return the business back to growth and improved profitability.
  • 17. Questions and Answers
  • 18. This presentation is based on Guinness Nigeria Plc’s unaudited interim financial results for the half-year period ended 31st December 2013. Guinness Nigeria Plc (“GN” or the “Company”) has obtained some information in this presentation from sources it believes to be reliable. Although GN has taken all reasonable care to ensure that the information herein is accurate and correct, the Company makes no representation or warranty, express or implied, as to the accuracy, correctness or completeness of such information. Furthermore, GN makes no representation or warranty, express or implied, that its future operating, financial or other results will be consistent with results implied, directly or indirectly, by information contained herein or with GN’s past operating, financial or other results. Any information herein is as of the date of this presentation and may change without notice. Guinness Nigeria undertakes no obligation to update the information in this presentation. In addition, some of the information in this presentation may be condensed or incomplete, and this presentation may not contain all material information in respect of GN. This presentation also contains “forward-looking statements” that relate to, among other things, GN’s plans, objectives, goals, strategies, future operations and performance. Such forward-looking statements may be characterised by words such as “estimates,” “aims,” “expects,” “projects,” “believes,” “intends,” “plans,” “may,” “will” and “should” and similar expressions but are not the exclusive means of identifying such statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause GN’s operating, financial or other results to be materially different from the operating, financial or other results expressed or implied by such statements. Although GN believes the basis for such forward-looking statements to be fair and reasonable, the Company makes no representation or warranty, express or implied, as to the fairness or reasonableness of such forward-looking statements. Furthermore, GN makes no representation or warranty, express or implied, that the operating, financial or other results anticipated by such forward looking statements will be achieved. Such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. GN undertakes no obligation to update the forward-looking statements in this presentation. Important Notice