2017 Earnings Presentation April 2018 This presentation has been - - PowerPoint PPT Presentation
2017 Earnings Presentation April 2018 This presentation has been - - PowerPoint PPT Presentation
2017 Earnings Presentation April 2018 This presentation has been prepared by Beluga Group, Co. (the Company , or about health related issues; Beluga Group ) and together with its subsidiaries. By attending the meeting where the
This presentation has been prepared by Beluga Group, Co. (the “Company“, or “Beluga Group”) and together with its subsidiaries. By attending the meeting where the presentation is made, or by reading the presentation slides, you agree to the following limitations and notifications. This presentation is strictly confidential to the recipient, may not be distributed to the press or any other person, and may not be reproduced in any form, in whole or in part. Failure to comply with this restriction may constitute a violation
- f applicable securities laws. This presentation does not constitute or form part of, and
should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire shares of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction. Neither this presentation nor any part thereof, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation may contain statements that are, or may be deemed to be, forward-looking statements within the meaning of the U.S. federal securities laws and are intended to be covered by the safe harbors created thereby. Examples of such forward-looking statements include, but are not limited to statements of the Company’s predictions, forecasts, projections, strategies, plans, targets, objectives, expectations, estimates, intentions, beliefs or goals, including those related to acquisitions, sales, products or services, results of operations, financial condition, liquidity, prospects or dividend policy; statements concerning future business or industry performance; other statements that do not relate strictly to historical or current facts; and assumptions underlying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the forward-looking statements will not be achieved. Among other things, forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. Readers should be aware that several important factors could cause the Company’s assumptions to be incorrect, and could cause actual results to differ materially from the predictions, forecasts, projections, strategies, plans, targets,
- bjectives, expectations, estimates, intentions, beliefs or goals expressed in such
forward-looking statements. These factors include:
- changes in political, social, legal or economic conditions in Russia generally, or in
the regions of Russia in which the Company operates, including changes in levels
- f consumer spending and demand for some or all of its products;
- changes in consumer preferences and tastes, demographic trends or perceptions
about health related issues;
- increased competitive product and pricing pressures and unanticipated actions by
competitors that could impact the Company’s market share, increase expenses and hinder growth potential;
- the ability to complete business combinations, partnerships, acquisitions or
disposals, existing or future, and to achieve integration, expected synergies and/or costs savings;
- levels of marketing, promotional and innovation expenditure by the Company and
its competitors;
- the Company’s ability to protect its intellectual property rights;
- increasing recognition in Russia of product liability and personal injury torts;
- legal and regulatory developments and changes in the policies of the government
- f the Russian Federation, including regional authorities, including regulatory
developments or policy changes regarding consumption of or advertising for spirits, or taxation;
- changes in the cost of raw materials and labor costs;
- renewal of distribution rights and contracts on favorable terms when they expire;
- technological developments that may affect the distribution of products;
- changes in financial and equity markets, including significant interest rate and
foreign currency exchange rate fluctuations, which may affect the Company’s access to or increase the cost of financing or which may affect the Company’s financial results;
- changes in accounting standards, policies or practices;
- availability of qualified personnel, including accounting personnel; and
- ability to identify other risks relating to the Company’s business and manage the
risks associated with the aforementioned factors. This list of important factors is not exhaustive. Readers should carefully consider such factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which the Company operates. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update or revise any of them. Readers should not place undue reliance on forward-looking statements. The Company does not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and 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.
2
COMPANY’S 2017 FINANCIAL HIGHLIGHTS
3
4% total volume increase Sales grew 6% and reached 61 bln. Rubles Net Revenue increased by 4% to 37 bln. Rubles Operating profit increased by 15% to 2,9 bln. Rubles EBITDA grew 13% to 3,6 bln. Rubles EBITDA and Operating margins improved by 0,7 pp. 138% growth of Net Income to 655 mln. Rubles. Net margin improved by 1 pp.
COMPANY’S HIGHLIGHTS
- #1 distilled spirits producer in Russia
- #1 vodka producer in Russia
- #1 independent importer in Russia
- #1 flavored spirits producer including bitters, herbal liquors, flavored liquors
- #3 brandy producer
- 12% legal vodka market share
- 10% brandy market share
- 20% flavored liquors market share
- Belenkaya is #1 vodka in Russia
- BELUGA is dominant player in super-premium category
- Myagkov is leading brand in low-premium category
Leadership Market position Brands Distribution
- #1 best in class distribution platform in Russia
4
6 609 6 779 2 000 4 000 6 000 8 000 2016 2017
+3%
29 245 30 393 11 000 22 000 33 000 2016 2017
+4%
35 903 37 303 20 000 40 000 2016 2017
+4%
18% 82%
Alcohol Food
18% 82%
Alcohol Food
CONSOLIDATED REVENUE
Consolidated Revenue, million RUB Revenue breakdown by segments, million RUB (1) Consolidated Revenue split, %
Source: Company’s IFRS financial statements Note (1): Net of intersegment operations
Main driver for revenue increase was double digit (+35%) growth of exclusive distribution and export (+25%) volumes. Important note: Due to new Trade Law implementation in the beginning of 2017 the Company’s PnL structure changed. The Company provided reduced prices for retail chains and, accordingly, cut the trade- marketing expenses (previously, significant part of the trade- marketing costs was reimbursed via retro-discounts).
Alcohol (1) Food (1)
5
2016 2017
1 485 1 545 800 1 600 2016 2017
+4%
13 010 12 064 7 000 14 000 2016 2017
- 7%
14 518 13 675 4 000 8 000 12 000 16 000 2016 2017
- 6%
10% 90%
Alcohol Food
12% 88%
Alcohol Food
CONSOLIDATED GROSS PROFIT
Consolidated Gross Profit, million RUB Gross Profit breakdown by segments, million RUB (1) Consolidated Gross Profit split, %
Source: Company’s IFRS financial statements Note (1): Net of intersegment operations
The consolidated Gross Profit and the Alcohol segment Gross Profit declined together with the Distribution Cost (decreased by 17%) due to changes in the PnL structure which were caused by implementation of the New Trade Law since 1st of January 2017. The Company provided reduced prices for retail chains and simultaneously cut significantly the trade-marketing
- expenses. Changes in the PnL structure are neutral for bottom
line profitability.
Alcohol (1) Food (1)
6
2016 2017
3 218 3 625 2 000 4 000 2016 2017
+13%
CONSOLIDATED EBITDA AND NET PROFIT
EBITDA, million RUB G&A and distribution expenses , million RUB Operating profit and Net Income, million RUB Main reasons of 19% year-on-year increase in G&A: 4% volume growth; growth of rent expenses; increase in expenses on staff education. 17% year-on year decrease in distribution expenses due to the changes in PnL structure which were caused by new Trade Law implementation in the beginning of the year. According to the Law the only 5% discount is allowed and no trade-marketing activity at a producer cost. EBITDA grew by 13% mostly due to volume growth and proactive pricing policy. Net income grew by 138% due to EBITDA growth and decline in financial expenses.
2 486 2 848 275 655 1 000 2 000 3 000 2016 2017 2478 2951 9 346 7 719 4 000 8 000 12 000 2016 2017 G&A Distribution expenses
- 17%
+19% +15% +138%
10.2% 9.7%
7
Source: Company’s IFRS financial statements
2802 2930 900 5 647 6 123 10 112 4 000 8 000 12 000 2015 2016 2017 Long tem debt Short term debt Net debt 2016 2017 Change, %
Debt 9 053 11 012 +22% Cash & cash equivalents 1 010 819
- 19%
Net Debt 8 043 10 193 +27% Equity & reserves 19 453 19 448 0% Total capital
(1)
26 421 30 404 +15% EBITDA 3 218 3 625 +13% Net Debt/Equity 0.41 0.52 +0,11pp Net Debt/Total capital 0.31 0.33 +0,02pp Net Debt/EBITDA 2.50 2.81 +0,31pp
42% 26% 32% 90% 2% 8% Less than 1 year 1-2 years 2-5 years Less than 1 year 1-2 years 2-5 years
BELUGA GROUP GROUP DEBT STRUCTURE
Debt evolution, million RUR
7 288 8 043 10 193 8 449 9 503 11 012
As of 31 December, 2016 As of 31 December, 2017
- The cost of borrowing significantly decreased (9.4%
p.a. in 2017 vs 12.5% p.a. in 2016).
- Share of the unsecured loans reached 95%.
- The structure of the debt was considerably improved:
- nly 8% of the debt is short-term.
- The Company’s debt grew mainly due to growth of
- ur sales and inventories.
Note: Company’s IFRS audited statements, Note (1): Total Capital = (Long term debt + Total Equity)
8
INCOME STATEMENT
Source: Company’s IFRS financial statements
9
2014 2015 2016 2017 YoY, % Net revenue 28 163 30 706 35 903 37 303 4% Cost of sales (16 135) (18 033) (21 385) (23 628) 10% Gross profit 12 028 12 673 14 518 13 675
- 6%
Gross margin 43,0% 41,0% 40,4% 36,7%
- 3,7 pp.
G&A expenses (2 411) (2 582) (2 478) (2 951) 19% Distribution expenses (7 389) (8 260) (9 346) (7 719)
- 17%
Other income/(expenses) 46 278 (208) (157) Operating profit 2 274 2 109 2 486 2 848 15% Operating margin 8,0% 7,0% 6,9% 7,6% 0,7% EBITDA 2 973 2 885 3 218 3 625 13% EBITDA margin 11,0% 10,0% 9,0% 9,7% +0,7 pp. Net finance costs (945) (1 737) (2 039) (1 931)
- 5%
Income tax (239) (131) (178) (271) Net income 1 090 241 275 655 138% Net margin 4,0% 1,0% 0,8% 1,8% +1 pp.
2014 2015 2016 2017 Operating profit 2 274 2 109 2 486 2 848 Depreciation and amortisation 699 776 726 768 Other non-cash transactions 90 (123) 183 124 Changes in working capital (2 316) 1 332 (1 231) (1 771) CF from operating activities 747 4 094 2 164 1 969 Interest paid (1 265) (1 918) (2 004) 1 849 Income tax paid (360) (109) (63) 578 Net CF from operating activities (878) 2 067 97 (458) Acquisition of subsidiaries and associate 11 (700) 16 (380) Acquisition and disposal of PPE (694) (245) (500) (362) Net CF from investing activities (683) (945) (484) (742) Issue of share capital
- Repurchase of own shares
(418) (177) (179) (913) Loans received 30 926 30 351 37 532 40 885 Loans repaid (28 916) (30 596) (37 117) (38 963) Net CF from financing activities 1 576 (443) 236 1 009 Net increase/(decrease) in cash 15 679 (151) (191) Cash at beginning of the year 467 482 1 161 1 010 Cash at end of the period 482 1 161 1 010 819
CASH FLOW
Source: Company’s IFRS financial statements
10
APPENDICES
APPENDICES
COMPANY’S STRATEGY
12
STRATEGY
CONTINUED DEVELOPMENT OF THE DISTRIBUTION PLATFORM WITH A FOCUS ON DIRECT SALES ACHIEVING DIRECT CONTACT WITH END CUSTOMERS THROUGH TRADE MARKETING BEST IT PLATFORM EXPANSION OF THE GENERAL EXPORT GEOGRAPHY AND IN PARTICULAR BELUGA BRAND IMPROVING THE QUALITY OF IMPORTED OPERATIONS THROUGH TARGETED SELECTION OF PARTNERS FOCUS ON SUPER-PREMIUM INTERNATIONAL VODKA MARKETS DIVERSIFIED BRAND PORTFOLIO, COVERAGE OF ALL SEGMENTS FOCUS ON PREMIUM AND MARGINAL PRODUCTS INCREASE IN PRICE AND BRAND RECOGNITION STRENGTHENING THE PRESENCE IN GROWING CATEGORIES
- PRODUCTION, SALE AND
DISTRIBUTION OF ITS OWN ALCOHOL PRODUCTS USE OF MODERN TECHNOLOGIES TO ENHANCE THE OVERALL OPERATIONAL PERFORMANCE BRAND PORTFOLIO DISTRIBUTION EXPORT KEY BUSINESS
Become the dominant spirits company in Russia with a diversified portfolio of brands and products and best in class distribution platform
90 000
- 100 000
13
13,1% 10,5% 9,4% 9,2% 6,4% Beluga Group Tatspirtprom Roust Kristall ASG 11,8% 10,8% 10,2% 8,4% 7,4% Allians ALVISA Beluga Group KVC Kin
volume
TOP 5 FLAVORED LIQUORS PRODUCERS, 2017 TOP 5 VODKA LEGAL PRODUCERS, 2017 TOP 5 BRANDY PRODUCERS, 2017
BELUGA GROUP RUSSIA
MARKET
RUSSIAN SPIRITS MARKET (MAIN CATEGORIES), 2016
000, 9L Cs. volume
13 000 11 456 4 333
- 10 000
20 000 30 000 Vodka Flavoured Liqours (LVI) Brandy & Cognac Whisky
Source: Rosstat,
22,5% 8,9% 8,4% 7,4% 6,1% Beluga Group Tatspirtprom OPVZ Sordis Global Spirits
volume
6,2% 5,6% 5,5% 4,9% 4,6% 3,9% 3,7%
0% 4% 7%
60,1% 11,3% 9,4% 3,1% 3,1% 2,8% 2,4%
0% 35% 70%
12,6% 9,9% 7,4% 7,4% 6,6% 5,6% 5,3%
0% 4% 8% 12% 16%
STANDARD ECONOMY
*Source: Nielsen DJ2015 - ON2016
14,7% 13,4% 8,3% 7,8% 6,5% 6,5% 5,9%
0% 4% 8% 12% 16%
SUPER-PREMIUM LOW-PREMIUM
LEADING BRANDS* SEGMENT’S SHARES
14
VODKA PORTFOLIO
RUR 405 RUR 525 RUR 600 RUR 750 RUR 1200 – RUR 5000
TSAR Belenkaya (Whitish) Russky Lyod (Russian Ice) Myagkov Arkhange lskaya VEDA ICE Beluga Noble Beluga Trans atlantic Racing Beluga Noble Celebration Beluga Allure Beluga Gold Line
Traditional quality vodka Pure,
- rganic
vodka Patriotism, Victory Trendy Vodka for cocktails Craft, authentic brand High-quality product Handcrafted Noble vodka Vodka for Trendsetters Vodka for special
- ccasion
Aristocratic Gastronomic vodka
Low-middle Premium
50% ownership. Exclusive agreement for production and distribution
Sub-premium Super-premium, Ultra-premium Middle
DIVERSIFIED PORTFOLIO OF NATIONAL BRANDS
15
VODKA PORTFOLIO
Retail Price per 0,75 L
RUR 705 RUR 765 RUR 840 RUR 880-1100 RUR 750 RUR 325-465 RUR 615 RUR 585 RUR 570 RUR 550 Zolotoy Rezerv (Golden Reserve) Staraya Gvardia (Old Guard) Le Lion Bastion Fox&Dogs Dr August Ussuriiskiy Balsam Ussuriiskiy Liqueur Captain’s Rum Captain’s Gin Traditional, classic, Russian brandy History, Russian victory Classic French
- style. 100%
French spirits Strong and emotional Traditional Scotch Nature, unique tastes Eco, pure nature Voyage, Adventures Sea Adventures
Low-middle Middle Low-premium Premium
Brandy Balsam and herbal liqueurs Flavored liquors Gin Whiskey Rum
DEVELOPING PORTFOLIO OF NATIONAL BROWN SPIRITS BRANDS
16
BROWN SPIRITS PORTFOLIO
Source: Company data Retail Price per 0,75 L
BELUGA GROUP IMPORTED SPIRITS PORTFOLIO
SCOTCH WHISKY IRISH WHISKY COGNAC BRANDY BOURBON TEQUILA GIN SAMBUCA BITTER RUM ABSINTHE 17
- IMPORT. SPIRITS
BELUGA GROUP STRATEGY IN IMPORTED WINE BUSINESS
18
- IMPORT. WINE
FOCUS ON MIDDLE&PREMIUM PRICE SEGMENTS INVEST IN TRADE MARKETING AND BRAND BUILDING LEVERAGE DISTRIBUTION PLATFORM IN WINE DEVELOPMENT DEVELOPMENT NOBLE HOUSE FOR PREMIUM IMPORTED PRODUCTS
Address: 30/1 Obrucheva Str., bldg. 1 Moscow 117485 Russia Phone: +7 495 510 2695 +7 495 775 3050 Fax: +7 495 510 2697 +7 495 775 3052 E-mail: ir@sygroup.ru www.sygroup.ru
CONTACTS
19