Click to edit Master title style FY2018 Business Update MUF07 P/L - PowerPoint PPT Presentation

Click to edit Master title style FY2018 Business Update MUF07 P/L Report 30 Jan 2019 Click to edit Master subtitle style

FY2018: Delivered Record NPAT Post-MI of 4.9T and Strong 4Q2018 Momentum KEY FINANCIALS KEY HIGHLIGHTS FY2018 Performance (VND trillion) 2017 2018 % Growth 4Q17 4Q18 % Growth  2% net revenue growth driven by: Revenue 37.6 38.2 2% 10.2 11.6 14%  28% revenue growth of MCH backed by innovations and core MCH 13.5 17.3 28% 4.6 5.4 18% brands; and MNS 18.7 14.0 (25)% 4.1 3.9 (4)%  27% growth of MSR driven by operational efficiencies and MSR 5.4 6.9 27% 1.5 2.2 47% favorable price environment; offset with EBITDA 9.4 10.5 12% 3.2 2.8 (12)%  (25%) revenue decline of MNS due to slower pig feed market NPAT Post-MI 3.1 4.9 58% 1.9 1.1 (40)% recovery than expected Core NPAT Post-MI 1 2.2 3.5 58% 1.0 1.1 17%  EBITDA margin 25% 27% 2% 31% 24% (7)% 57% growth in core NPAT Post-MI driven by: Core NPAT Post-MI margin 6% 9% 3% 10% 10% 0%  SG&A rationalization with 2.6% reduction in SG&A as a EPS (VND/share) 2,681 4,227 58% 1,633 978 (40)% percentage of consolidated net revenue mainly from MCH Core EPS 2 (VND/share) 1,905 2,990 57% 845 988 17% reducing SG&A as a percentage of revenue by 5.0% compared to 2017 EXCLUDING ONE TIME IMPACT  Disciplined capital allocation (deleverage + reduced MI) with 17% Revenue (if excluding MNS) 18.9 24.2 28% 6.1 7.6 25% reduction in net interest expense Core NPAT Post-MI (if excluding 1.6 3.4 115% 0.9 1.2 36% MNS) 4Q2018 Performance Core NPAT Post-MI (if normalize 1.6 3.5 118% 0.7 1.1 58%  14% growth in net revenue driven by continuous double digit growth in ownership at TCB 3 ) MCH and MSR. Pig feed market started recovery with MNS topline growth of 18% in 4Q2018 versus 3Q2018  Successful launch of MEATDeli = shifting MNS to FMCG led business to drive long-term growth and profits across pig cycles  1. Core Profit excludes net one-time gains (non-core) of VND1,472 billion in 2Q2018 primarily from the “deemed 17% growth in core NPAT Post-MI with double digit margin driven by disposal” of the Company’s interest in Techcombank as a result of the bank’s recent equity issuances at a  ~VND12.5 trillion deleveraging resulting in VND170 billion interest price higher than the Company’s carrying value. Core Profit of 2017 excludes a net one-time gain of VND933 savings, offset with billion in 4Q2017 from selling convertible bonds of Techcombank.  2. Core EPS is calculated based on Core NPAT Post-MI as defined in footnote 1 divided by total number of 12% decline in EBITDA mainly from higher brand building shares (including treasury shares) investment of MCH to drive 2019 innovation pipeline 2 3. Assume MSN ownership of TCB in 2017 is the same as in 2018

FY2018: 57% Core NPAT Post-MI Growth driven by Sustainable MCH Growth and Rationalized SG&A… KEY HIGHLIGHTS REVENUE DRIVERS  28% growth in MCH for FY18 backed by brand (VND trillion) 3.8 1.5 + innovation focus and sustained growth (4.7) momentum of ~20% in 4Q2018 while maintaining healthy stock of less than 1 month  30%+ growth in seasonings and convenience foods supported by 38.2 37.6 37.6 37.6 successful premium innovations 32.9  35%+ growth in beverage driven by Wake-up 247 energy drinks and expanded distribution network 2017 MCH MNS MSR 2018 CORE NPAT POST-MI ON TRACK TO ACHIEVE BUDGET KEY HIGHLIGHTS  SG&A rationalization across businesses : (VND trillion)  MCH: Reduced trade promotion and invested back into marketing. Total SG&A growth of 7% 0.9 0.6 to deliver a topline growth of 28% 0.2 0.1 (0.4)  MNS: Standardized sales policy + optimized salesforce to achieve better sales efficiency. 3.5 Total SG&A reduction of 43% while revenue 2.2 2.2 2.2 2.2 2.2 1.8 declined by 25% 2017 Revenue Gross margin SG&A Net financial Others 2018 improvement reduction expense reduction 3

…as well as Strengthened Balance Sheet. KEY HIGHLIGHTS GROSS DEBT BALANCE  Gross debt decreased by over VND12.5 (VND trillion) Total Debt Debt to EBITDA trillion in 4Q2018 4.2x  Gross Debt / EBITDA = 2.1x (2018) 3.7x vs. 3.7x (2017)  Interest savings of VND1 trillion per 2.1x year to be fully realized from 2019 onwards and VND200 billion has 41.1 been realized in 4Q2018 34.8  Expect to achieve Vietnam’s long-term 22.2 sovereign credit rating of BB- in 2019. 2016 2017 2018 CASH MOVEMENTS DURING THE PERIOD KEY HIGHLIGHTS  Strong operation cash flow of VND7.3 (VND trillion) trillion (20% growth vs. 2017) (1.3) (1.9) 0.1  CAPEX of VND2.6 trillion: VND1.2 trillion for 10.9 (13.0) (2.6) building meat platform, maintenance + (2.6) 7.3 expansion of MSR and MCH, VND1 trillion 19.8 and VND0.4 trillion, respectively 17.8 17.8 12.8 10.1 10.1 8.1 8.1 6.8 5.0 Cash Net cash Net interest CAPEX Capital Net Net Net cash Others Cash YE2017 from paid contribution dividend borrowings from M&A YE2018 operating paid activities activities 4

FY2019 Outlook: Double Digit NPAT Margin on the back of 4Q2018 Momentum 2019 Low 2019 High (VND billion) 2017A 2018A 2019 Low 2019 High vs. 2018 vs. 2018 Revenue 45.0 50.0 18% 31% 37.6 38.2 EBITDA 9.4 10.5 NPAT 5.0 5.5 2% 12% 3.1 4.9 Core NPAT 2.2 3.5 5.0 5.5 44% 58% EBITDA margin 25% 27% Core NPAT margin 6% 9% 11% 11% MSN Group MCH MNS MSR  Growth driven by  Profitability is expected to  20%+ revenue growth  Pig price recovery with Profit Growth increased sales volume momentum led by feed market expected to grow by 2x revenue (5-10% growth) with; innovations in seasoning grow by 10%+ growth with double > 2x  Key risk: Continued low and convenience foods  Meat: Full ramp up in digit NPAT margin premiumization + beverage Tungsten price Hanoi (~5-10% revenue  Continue to ensure expansion anchored by Revenue environment contribution) + Ho Chi Minh Wake-up 247 effective SG&A investment city launch in 4Q2019 Growth  Key risk: Slower consumer (~15-16% as percentage  Key risk: (1) Slower over revenue) off-take of innovation consumer adaptation to  Fully realize interest pipeline and continued slow chilled fresh meat and momentum in beer savings from 2018 scale up of retail deleveraging distribution (2) Pig disease outbreak impacting feed sales growth 1) Excludes one-time gain of VND933 billion from disposal of Techcombank’s convertible bonds in 2H2017 5 2) Excludes net one-time gains (non-core) of VND1,472 billion in 1H2018 primarily from the “deemed disposal” of the Company’s interest in Techcombank as a result of the bank’s recent equity issuances at a price higher than the Company’s carrying value.

MCH: Brand and Innovation focus drove 28% revenue growth + 1.5x EBITDA growth REVENUE KEY HIGHLIGHTS OF 2018  Healthy and sustainable double digit revenue growth on the back of (VND trillion) (i) healthy distributor stock level of less than 1 month and (ii) increased +28% marketing investment by 34% + reduced sales spend by 7%  Strong premiumization in seasonings and convenience foods +18%  Continued growth momentum in beverages, especially in energy drinks segment 17.3 13.5  Recovery of coffee with 2018 growth of 10%+ given revenue de- growth in 2017 5.4 4.6 Driven by (i) Innovation focus contributing ~VND1 trillion in revenue and (ii) Brand focus with 34% marketing budget growth 2017 2018 4Q2017 4Q2018  50%+ growth in EBITDA (2x revenue growth) driven by pull business model EBITDA  Optimized trade promotion spending: ~8% over sales in FY2018 (VND trillion) EBITDA EBITDA margin vs. ~11% in FY2017  EBITDA margin in 4Q2018 is lower than average FY2018 26% 24% mainly because of higher investment in marketing for 4Q2018 20% 20% innovation launches to support 2019 growth 4.2 2.8 1.2 1.1 2017 2018 4Q2017 4Q2018 6