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Zambrew and Natbrew brief to institutional shareholders - July 2013

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Zambrew and Natbrew brief to institutional shareholders - July 2013

Zambrew and Natbrew brief to institutional shareholders - July 2013

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  • Moving to our financial outlook, we expect continued growth in most of our developing markets with modest improvements in some of our more mature economies. Clearly there is currently uncertainty in Europe given developments in the Eurozone, which we will continue to monitor closely.Opportunities for selective price increases and favourable mix benefits are anticipated across most regions, as we continue to develop and differentiate our brand portfolios.Raw material costs are expected to increase mid single digits on a per hectolitre basis, mainly driven by increases across a number of brewing raw materials.Capital expenditure for the full year is anticipated to amount to approximately $1.6 billion, with new breweries currently being constructed in Nigeria, Uganda and Zambia.Finally, we see potential to keep our effective tax rate near the level achieved in the year to March 2012, in part reflecting the impact of the Foster’s transaction. However, we recognise the potential for more volatility looking forward. ETR is expected to fall within the range of 27% to 29% for the next year and the medium term.
  • Moving to our financial outlook, we expect continued growth in most of our developing markets with modest improvements in some of our more mature economies. Clearly there is currently uncertainty in Europe given developments in the Eurozone, which we will continue to monitor closely.Opportunities for selective price increases and favourable mix benefits are anticipated across most regions, as we continue to develop and differentiate our brand portfolios.Raw material costs are expected to increase mid single digits on a per hectolitre basis, mainly driven by increases across a number of brewing raw materials.Capital expenditure for the full year is anticipated to amount to approximately $1.6 billion, with new breweries currently being constructed in Nigeria, Uganda and Zambia.Finally, we see potential to keep our effective tax rate near the level achieved in the year to March 2012, in part reflecting the impact of the Foster’s transaction. However, we recognise the potential for more volatility looking forward. ETR is expected to fall within the range of 27% to 29% for the next year and the medium term.
  • Transcript

    • 1. Investor Conference Call Full year results Twelve months ended 31 March 2013 12 July 2013
    • 2. July 2013© SABMiller plc 2013 ZAMBIA COUNTRY OVERVIEW 2 • Robust GDP growth since 2000 • Four peaceful, democratic Presidential transitions since 2000 • Credit Grade: • Moody: B+ • S&P: B+ • 2012 US$750mn Eurobond oversubscribed 15-fold: • Around 425 investors took part in the issue, with 56 per cent of them from the U.S., 40 per cent from Europe, 3 per cent from Asia
    • 3. July 2013© SABMiller plc 2013 Attractive economic fundamentals 3 SOURCE: International Monetary Fund; McKinsey Global Institute; Economist Intelligence Unit Total population : 14.08m Rural /Urban : 60/40 Gender split (M/F) : 49/51 2012 GDP : US$20.8b
    • 4. July 2013© SABMiller plc 2013 And set to continue looking good 2011 2012 2013 2014 2015 Real GDP growth % 6.4 7.3 7.0 7.8 7.7 Real private consumption growth 8.1 7.6 5.2 5.3 5.9 GDP per capita (US$) 1623 1820 1941 2078 2228 CPI % 6.5 6.9 6.3 6.2 6.7 US$ Exchange rate 5.001 5.17 5.55 5.77 5.8 Population (million) 13.6 13.9 14.3 14.8 15.1 Population growth % 2.1 2.8 2.8 2.8 2.8 4
    • 5. July 2013© SABMiller plc 2013 Good prospects for growth of the business 5 Country GDP growth% 2012 GDP p/cap Mozambique 7.5 650 Zambia 7.3 1820 Tanzania 6.8 599 Kenya 4.7 976 Zimbabwe 4.4 755 Botswana 3.8 9398
    • 6. July 2013© SABMiller plc 2013 Real population growth rates of 2.8% Population growth 2010-2013 Robust GDP growth 2012 Percentage growth 7.3% SOURCE: International Monetary Fund; McKinsey Global Institute; Economist Intelligence Unit Age Range 2010 2020 % Growth 15-19 1.43 1.57 10% 20-24 1.24 1.41 14% 25-29 0.98 1.17 19% Totals 3.65 4.15 14% Demographic evolution in our favour
    • 7. Zambian Breweries plc. Full year results Twelve months ended 31 March 2013 12 July 2013
    • 8. July 2013© SABMiller plc 2013 Operating Highlights  Good trading environment, despite increase in new regulations  Beer growth of 12% and strong market share growth underpinned by improved execution and brand health  Soft drinks growth of 30% - affordability, availability and market development  Improved manufacturing and distribution efficiencies  Completion of the construction of the new Ndola Brewery  Successful local sourcing initiatives culminating in the approval of the Maltings plant  Revised HR structure driving improved processes and employee engagement  Increased our total tax contribution from $95.7m to $107.7m
    • 9. Investments: The Old Ndola Brewery – Built 1952
    • 10. Investments: The New Ndola Brewery – Built 2012
    • 11. Prepared by 11 COMPETITOR LANDSCAPE
    • 12. July 2013© SABMiller plc 2013 Clear Beer Competitors Competitor Brands and Packs Pack Visuals Kazuma Amstel 340ml NRB Heineken 330ml, 340ml CAN and NRB Windhoek 330ml, 340ml, 440ml CAN and NRB Congolese Imports Primus 1000ml PET Simba, 330ml CAN, 750ml RGB Turbo King 1000ml PET
    • 13. July 2013© SABMiller plc 2013 AFBs Competitors Competitor Brands and Packs Pack Visuals Kazuma Hunters Gold , Dry and Lemon, 340ml, 660ml NRB Smirnhoff Spin and Ice, 340ml NRB Distel Savanna Light and Dry 340ml NRB
    • 14. July 2013© SABMiller plc 2013 CSDs Competitors Competitor Brands and Packs Pack Visuals Varun Beverages Pepsi 250, 330ml CAN, 330ml PET, 350ml RGB, 1.25ml PET and 2L PET Mirinda 250, 330ml CAN, 330ml PET, 350ml RGB, 1.25ml PET and 2L PET 7Up 250ml CAN, 330ml PET, 350ml RGB, 1.25ml PET and 2L PET Californian Beverages Apple-max, Frooty, Cali-Cola, Tingling Ginger, and Hubbly Bubbly (all 350ml PET) Accacia Beverages Havanna, Lemon-mania and Tango - 425ml PET
    • 15. Zambian Breweries plc. Financial Performance Twelve months ended 31 March 2013
    • 16. July 2013© SABMiller plc 2013 Trading and Business Environment  GDP growth of +7.0% (Copper and Agriculture). CPI at 6.3%  New government - number of sudden regulatory changes – SI 33 - Local transactions to Kwacha only – excess US$, exchange losses – SI 23 – Alcohol packaging restrictions – RB and PET in Chibuku – SI 64 - Trading Hours – Chibuku sales – SI 47 – Minimum Wages – BOZ Amendment Act 2013 – forex monitoring  Rebasing of the Kwacha by 1000 on 1 Jan 2013  CAPEX intensive year 16
    • 17. July 2013© SABMiller plc 2013 Trading and Business Environment – Exchange Rates 17 ZMK/ZAR ZMK/USD Good positive price variance on imports Loss on forward contracts
    • 18. July 2013© SABMiller plc 2013 Financial Highlights  Beer growth of 12%, soft drink growth of 30%  Beer price increase of 7% in March 2012  Soft drink 300ml RGB price reduction of 23% in anticipation of excise removal in March 2012  Soft drink 500ml PET price reduction of 7% due to the removal of excise tax in March 2013  Revenue growth of 20%  Strong fixed cost controls in the business  Operating profit growth of 29%  Operating profit margin growth of 140 bps
    • 19. July 2013© SABMiller plc 2013 Financial Highlights  15% reduction in interest burden  Finance costs driven up by $3.3m of exchange losses  US$57m of $75m syndicated facility refinanced in February 2013  Drop in effective tax rate from 41% to 33%.  CAPEX spend of US$ 50m in line with approved budget
    • 20. July 2013© SABMiller plc 2013 US$’ 000 March 13 March 12 Change % Reported Group revenue 220,811 183,815 20% EBITA 44,704 34,593 29% EBITA margin (%) 20.2 18.8 140 bps Sales volumes (hl’000) Total 1,922 1,623 18 Lager 1,188 1,059 12 Soft drinks 734 564 30 20 Financial results – F13
    • 21. July 2013© SABMiller plc 2013 US$’ 000 March 13 March 12 Change % Group revenue 220,811 183,815 20 Gross Profit 102,706 82,152 25 Gross margin (%) 46.5 44.7 180 Bps Distribution costs (25,998) (19,507) (33) Admin and Other expenses (32,004) (28,052) (14) Operating Profit 44,704 34,593 29 Finance Costs (14,367) (10,408) (38) Profit before taxation 30,337 24,185 25 Income tax expense (9,987) (9,857) (1) Profit for the year 20,350 14,328 42 21 Income Statement
    • 22. July 2013© SABMiller plc 2013 US$’ 000 March 13 March 12 Goodwill and Intangible assets 14,692 13,687 Property, plant and equipment 201,266 174,863 Non-current assets 556 - Current assets excluding cash 70,502 53,118 Cash and cash equivalents 7,448 26,834 Borrowings (61,391) (71,979) Other current and non-current liabilities (90,546) (71,713) Net Assets and Total Equity 142,527 124,810 22 Balance sheet
    • 23. July 2013© SABMiller plc 2013 US$’ 000 March 13 March 12 Net cash generated from operating activities 52,061 44,931 Net cash used in investing activities (50,008) (64,484) Net cash (used in)/generated from financing activities (20,599) 50,971 Net (decrease)/increase in cash and cash equivalents (18,546) 31,418 Movement in cash and cash equivalents Cash and cash equivalent at the beginning of the year 23,439 (10,471) Exchange difference on opening balance (758) - (Decrease)/Increase in cash and cash equivalents (18,546) 31,418 Exchange difference in cash and cash equivalents (3,384) 2,492 Cash and cash equivalent at end of the year 751 23,439 23 Cash flow
    • 24. July 2013© SABMiller plc 2013 Interest Bearing Debt
    • 25. July 2013© SABMiller plc 2013 Capital Expenditure US$'000 Description F11 F12 F13 F14 Budget Capacity 6,511 48,829 36,745 2,917 Continuity 6,310 14,306 10,894 21,058 Capability - 1,636 2,164 15,985 Total 12,821 64,771 49,804 39,960 Exchange rates 4.81869773 5.001 5.16802 5.55592 CAPEX 12,821 64,771 49,804 39,960 EBITA 28,554 34,593 44,704 59,176 Capex as a % EBITA 44.9% 187.2% 111.4% 67.5%
    • 26. July 2013© SABMiller plc 2013 Dividend recommendation  Owing to high level of debt, interest costs needing to be serviced, no dividend declaration has been recommended for 2013  Internally generated cash will mainly be used to pay down borrowings further 26 2012 2013 2014 US$ '000 Borrowings (71,979) (61,391) (45,178) Cash and cash equivalents 26,835 7,448 9,001 Net debt (45,145) (53,943) (36,177) Equity 124,811 142,526 Total capital 169,955 196,470 Gearing 27% 27% CAPEX spend (64,771) (49,804) (39,960) Interest paid (12,899) (10,983) (7,538) Interest burden if 50% dividend paid (702) (1,053)
    • 27. July 2013© SABMiller plc 2013 27 VAT and Excise Contribution  A – Excise in March ‘09 reduced from 75% to 60%  B – Excise rate reduced in April ‘10 from 60% to 40%  C – Excise on soft drinks removed from 01 January 2013 A B C
    • 28. July 2013© SABMiller plc 2013 Financial outlook – current financial year 28  Continued strong volume and revenue growth  Raw material input costs expected to rise in double digits - Malt  Offset to some extent by Ndola Brewery efficiencies and local preform manufacture  Margin sacrifice for RTM advocacy – remote depots  EBITA growth – double digit  Full year CAPEX - US$ 40m – Maltings  Anticipated interest bill - US$ 7.5m
    • 29. Thank you. Q&A on Zambian Breweries plc.
    • 30. National Breweries plc. Financial Performance Twelve months ended 31 March 2013
    • 31. July 2013© SABMiller plc 2013 Operating Highlights  Good trading environment, despite an increase in new regulations  Roll back of price in March 2012 by 18%  Beer volume growth of 34%  Launch of Chibuku Super in the second half.  Margin pressure as a result of price rollback, commodity cost increases and the maintenance burden  Approval obtained to build new Lusaka facility  Improved HR function and processes with performance management as the anchor  Increased our total tax contribution from $15m to $20m
    • 32. Investments: The New PET Line – Installed 2012
    • 33. Prepared by 33 COMPETITOR LANDSCAPE
    • 34. July 2013© SABMiller plc 2013 Opaque Competitors Competitor Brands and Packs Pack Visuals Lusaka Breweries Lusaka Beer 1,000ml Carton Nkwazi Breweries Nkwazi Beer, 750ml PET 1,000ml Carton Chatbrew Chat Beer 750ml PET 1,000ml Carton
    • 35. National Breweries plc. Financial Performance Twelve months ended 31 March 2013
    • 36. July 2013© SABMiller plc 2013 Highlights  Chibuku volume growth of 34%  Revenue growth of 31%  Gross margin decline of 720bps due to; • Price roll back of 18% • Maize pricing 14%  Fixed cost growth of 5%  Limited operating profit decline to 8%  Chibuku PET line commissioned in October 2013  Increase in effective tax rate from 36% to 38%
    • 37. July 2013© SABMiller plc 2013 US$’ 000 March 13 March 12 Change % Reported Group revenue 65,300 49,865 31 EBITA 10,178 11,037 (8) EBITA margin (%) 15.6 22.1 (650) Bps Sales volumes (hl’000) Traditional beer 2,317 1,736 34 37 Financial results – F13
    • 38. July 2013© SABMiller plc 2013 US$’ 000 March 13 March 12 Change % Group revenue 65,300 49,865 31 Gross Profit 20,675 19,405 7 Gross margin (%) 31.7 38.9 (720) Bps Distribution costs (4,562) (2,767) (65) Admin and Other expenses (5,935) (5,601) (6) Operating Profit 10,178 11,037 (8) Finance costs (42) (97) 57 Profit before taxation 10,136 10,940 (7) Income tax expense (3,855) (3,889) (1) Profit for the year 6,281 7,051 (11) 38 Income statement
    • 39. July 2013© SABMiller plc 2013 US$’ 000 March 13 March 12 Property, plant and equipment 13,523 8,519 Intangible assets 270 - Current assets excluding cash 8,859 4,884 Cash and cash equivalents 2,415 1,729 Other current and non-current liabilities (13,924) (9,547) Net Assets and Total Equity 11,143 5,585 39 Balance sheet
    • 40. July 2013© SABMiller plc 2013 40 Cash Flow US$’ 000 March 13 March 12 Net cash generated from operating activities 8,297 11,308 Net cash used in investing activities (7,434) (3,423) Net cash used in financing activities (174) (4,683) Net increase in cash and cash equivalents 689 3,202 Movement in cash and cash equivalents Cash and cash equivalent at the beginning of the year 1,827 (1,390) Exchange difference on opening balance (59) - Increase in cash and cash equivalents 689 3,202 Exchange difference in cash and cash equivalents 51 15 Cash and cash equivalent at end of the year 2,508 1,827
    • 41. July 2013© SABMiller plc 2013 Capital Expenditure USD'000 Description F12 F13 F14 Budget Capacity 2,434 3,829 10,955 Continuity 1,129 3,235 14,137 Capability - 432 - Total 3,563 7,496 25,092 Exchange rates 5.001 5.168 5.55592 CAPEX 3,563 7,496 25,092 EBITA 11,037 10,178 Capex as a % EBITA 32.3% 73.7%
    • 42. July 2013© SABMiller plc 2013 Dividend Recommendation 42  National Breweries, although in a net cash position has spent funds on the Kitwe Brewery in 2013.  2014 shows an increased CAPEX spend mainly in respect of Lusaka Brewery upgrade and a move into a gearing position for the first time. 2012 2013 2014 US$ '000 Borrowings - - (12,088) Cash and cash equivalents 1,729 2,415 - Net cash/(debt) 1,729 2,415 (12,088) Equity 5,585 11,143 Total capital 7,314 13,558 Gearing 0% 0% 43% CAPEX spend (3,563) (7,496) (25,092) Interest paid (46) (93) (1,490)
    • 43. July 2013© SABMiller plc 2013 43 VAT and Excise Contribution
    • 44. July 2013© SABMiller plc 2013 Financial outlook – current financial year 44  Chibuku Kitwe Super PET line fully commissioned  Change in mix in Chibuku towards SUPER  Chibuku Lusaka rebuild and new SUPER line  Raw material input costs expected to rise in double digits – Maize  EBITA growth – double digit  Full year CAPEX – US$ 25m
    • 45. Thank you. Q&A on National Breweries plc.

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