Management presentation May 2012 Disclaimer NOT FOR RELEASE, - - PowerPoint PPT Presentation
Management presentation May 2012 Disclaimer NOT FOR RELEASE, - - PowerPoint PPT Presentation
Management presentation May 2012 Disclaimer NOT FOR RELEASE, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL. IMPORTANT NOTICE By attending the
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Disclaimer
NOT FOR RELEASE, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL. IMPORTANT NOTICE By attending the meeting where this presentation is made, you agree to be bound by the following limitations. In the European Economic Area, with respect to any Member State that has implemented Directive 2003/71/EC (together with any applicable implementing measures in any Member State, the "Prospectus Directive") this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be
- ffered or sold in the United States or to US persons (as such term is defined in Regulation S under the Securities Act) unless the securities are registered under the
Securities Act, or an exemption from the registration requirements of the Securities Act is available. The issuer of the securities has not registered, and does not intend to register, any portion of the offering in the United States, and does not intend to conduct a public offering of securities in the United States. This communication is directed solely at (i) persons outside Poland and the United Kingdom, or (ii) persons with professional experience in matters relating to investments and high net worth entities, and other persons to whom it may lawfully be communicated, falling within respective provisions implementing article 3.2.a
- f the Prospectus Directive in Poland, (iii) persons with professional experience in matters relating to investments falling within Article 19(5) of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the "Order"), (iv) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order, and (v) persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 ("FSMA")) in connection with the issue or sale of any securities of the Company or any member of its group may otherwise lawfully be communicated or caused to be communicated (all such persons in (i)-(v) above being "relevant persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with relevant persons. Any person who is not a relevant person should not act or rely on this communication. This presentation and its contents are confidential and proprietary to Milkiland N.V. (the "Company") and no part of it or its subject matter may be reproduced, redistributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person (excluding the relevant person's professional advisers) or published in whole or in part for any purpose without the prior consent of the Company, UniCredit Bank AG (London Branch) and Concord (Bermuda) Limited. If this presentation has been received in error then it must be returned immediately. The recipients of this presentation should not base any behaviour in relation to investments or products which would amount to market abuse on the information in this presentation until after the information has been made generally available. Nor should the recipient use the information in this presentation in any way which would constitute market abuse. These materials shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction. The information contained in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the correctness, completeness or accuracy of the information or opinions contained therein. Neither the Company nor any of its representatives will be liable for any damages arising from any use of this presentation or otherwise arising in connection with this presentation. Assumptions, opinions and views reflected in this presentation are solely opinions and forecasts of the Company. Opinions and forecasts are statements using expressions such as "expects", "believes", "assumes", "is the opinion", "to the best of our knowledge" and similar phrases. They reflect the current view of the Company with regard to potential future events, which, however, are uncertain and therefore subject to risk. A multitude of factors can cause actual events to differ significantly from an anticipated development, such as changes in regulatory systems, increased or new competition in the market, risks arising from acquisitions, interest rate and currency risks or risks based on previous liabilities and litigation risks. Neither the Company nor its management can answer for the future accuracy
- f the opinions expressed in this presentation or the actual occurrence of the developments forecast.
The information contained herein has been prepared using information available to the Company at the time of preparation of the presentation. External or other factors may have impacted on the business of the Company and the content of this presentation, since its preparation. In addition all relevant information about the Company may not be included in this presentation.
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Agenda
1. Milkiland at a glance 4 2. Attractive dairy markets 5 3. Milkiland overview 9 4. Results of 2011 and outlook for 2012 15
- 5. Update on Q1 2012 results
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4
Milkiland at a glance
Russian Federation Ukraine Kazakhstan
Our markets and sales, 2011 Our products
Full range of consumer dairy products and dry milk products Focus on cheese & butter (yellow palette) and whole milk products (white palette), 54% and 36%
- f 2011 revenues respectively
Our financials
EUR m 2010 2011* Δ 2011 2010 Revenue 256.5 279.7 +9% EBITDA 44.3 34.6
- 22%
EBITDA margin 17.3% 12.4% Net debt 42.1 41.9 Net debt / EBITDA 0.95x 1.21x
Our business structure
All types of dairy Milkiland N.V. (The Netherlands) Milkiland-Ukraine (Ukraine) Ostankino Dairy Plant (Moscow, Russia)
100% 95%
Whole milk products
65% 30% 5% 2011
Attractive dairy markets
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Attractive dairy markets in Russia and Ukraine…
Attractive markets
- ca. 190 million combined population
- ca. EUR 16.4 billion dairy market size in 2010
Established traditions of dairy consumption High historical growth in key segments
Source: Eurostat, Derzhkomstat, Rosstat
Russia 14,4 Ukraine 2,0
Market split by country (2010, EUR bn*) Market split by segment (2010, EUR bn*)
Source: Eurostat, Derzhkomstat, Rosstat * Wholesale prices, net of VAT Source: Eurostat, Derzhkomstat, Rosstat
Whole milk products 9,4 Cheese 4,2 Butter 0,9 Other 1,9
16.4 16.4
5,089 306 423 9,280 880 407 300 600 900 1 200 1 500 1 800 2 100 2 400 Whole milk products Cheese Butter ('000 tonnes)
2000 2010
6.2% 11.1%
- 0.4%
CAGR 2000-10
Market growth by segment
5,000 7,500 9,000 12,500
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… with significant growth potential…
Attractive markets
Source: Eurostat, Derzhkomstat, Rosstat, UN Comtrade database, IFCN
- Raw milk equivalent is calculated for milk of 4% fat, 3.3% protein
- ** 2010 data not available yet.
Consumption of processed dairy products (2009**)
In raw milk equivalent*
Current per capita consumption lags behind neighbouring European countries Historical level of consumption in Russia and Ukraine was significantly higher
Consumption of drinking milk (2010)
17 33 57 63 73 75 100 20 40 60 80 100 120 Ukraine Russia Slovakia Germany Hungary Poland Romania (kg per capita)
Source: Eurostat, Derzhkomstat, Rosstat, UN Comtrade database
3 5 8 9 20 21 21 5 10 15 20 25 Ukraine Russia Slovakia Hungary Poland Romania Germany (kg per capita)
Source: Eurostat, Derzhkomstat, Rosstat, UN Comtrade database
Consumption of cheese (2010)
92 162 248 262 296 50 100 150 200 250 300 350 Ukraine Russia EU USA USSR 1990 (kg per capita)
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… and ample room for further consolidation
Attractive markets
Source: Companies’ data; Astarta-Tanit; Amico; Interfax Russia * Production subsidiaries in Ukraine and Russia ** Excluding non-dairy sales
Top 10 dairy players in Russia and Ukraine Dairy market supply structure (2010)
20 40 60 80 100
10,100 kt
Top-5 players
179 kt
Russia Ukraine
Whole milk products
1,368 kt 750 kt
(%) >200 players >100 players >200 players >50 players Russia Ukraine
Cheese
# Company
- Prod. assets
Sales (2010) EUR m % of total 1 Danone-Unimilk* Russia, Ukraine 1,568 9.6% 2 Wimm-Bill-Dann** Russia, Ukraine 1,302 7.9% 3 Vamin Russia 512 3.1% 4 Milkiland Russia, Ukraine 258 1.6% 5 Milk alliance Ukraine 204 1.2% 6 Molvest Russia, Ukraine 174 1.1% 7 Almira Ukraine 152 0.9% 8 Ehrmann* Russia 112 0.7% 9 Campina* Russia 107 0.7% 10 Hochland* Russia n/a 0.6% Other (>500 players) 11,900 72.6% Total 16,400 100%
Top-5 players Top-5 players Top-5 players
Milkiland overview
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Our Strategic goals
Dairy consumption in Russia and Ukraine poised for growth led by cheese and whole milk products Strong local players can capitalize on market growth and consolidation trend Milkiland is well- positioned to lead market consolidation across the CIS
Our aim is to become a clear CIS market leader in cheese and a Top-3 player in whole milk products
Milkiland overview
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Strong organic growth with selective M&A
Consolidated Revenues and EBITDA (EUR million) 12 15 21 27 30 33 44 35 2004 2005 2006 2007 2008 2009 2010 2011 63 139 114 165 270 200 259 280 Main cheese production capacities acquired and modernized By 2007 Milkiland becomes the largest milk processor and cheese maker in Ukraine Development of whole milk operations Acquisition of Ostankino in 2008 Acquisition integration Brand portfolio streamlining #1 Ukrainian cheese exporter
Milkiland overview
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Milkiland today – integrated dairy company
Milkiland overview
Production Warehousing & distribution Raw milk supply
- Long-standing
relationships with suppliers across 17 regions of Ukraine
- ca. 1,600 people
employed in milk collection
- Over 1,800
collection points
- 16 partner milk
cooperatives in 12 regions of Ukraine
- Leased ca. 21 ha of
land for development of own modern dairy farms
- 11 production
facilities with milk processing capacity
- f 1.1m tonnes p.a.
- Internationally
recognized standards of production and quality control
- Ukrainian plants
are favorably located in milk-rich regions
- Extensive
distribution network in Ukraine and Russia
- #1 Ukrainian
cheese exporter
- Key clients include
X5, Metro, Auchan, Fozzy, Furshet and Magnit
- Three umbrella
brands (Dobryana, Ostankinska, Kolyada) covering
- c. 80% of sales in
2011
- Mostly medium and
upper medium price positioning
Marketing & sales
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Diversified and flexible business model…
Dnipropetrovsk Kharkiv Kyiv Odessa Donetsk
Myrhorod Mena Chernigiv Okhtyrka Sumy Lviv Slavuta Lactis Romny Agrolite 10-50k tonnes 50-100k tonnes >100k tonnes Milk intake capacities:
- Whole milk products
- Cheese
- Dry milk products
- Milk collection plants
Plants specialization: Ostankino
Zaporizhya
Revenue by product (EUR m, 2011)
Cheese & butter 54% Whole milk products 36% Ingredients & other 10%
280
Revenue by geography (EUR m, 2011)
Russia 65% Ukraine 30% Other countries 5%
280 Milkiland overview
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Multiple sales and distribution channels
Milkiland overview
Source: Company
Revenues by distribution channel (EUR m, 2011)
Key accounts Exports dealers Distributors Local retail Other
280
Key accounts Hypermarket and supermarket chains active in the CIS 22 key accounts in 2011, including Metro, X5, Auchan, Fozzy and Furshet Exports dealers Key distributors of cheese and dry milk products abroad Regional distributors Access to regions where Milkiland is not represented directly in local retail Local retail Local retail chains, groceries and
- utlets
Important sales channel for fresh whole milk products Other HoReCa Industrial clients
Selected key accounts
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Financial performance Milkiland: results of 2011 and outlook for 2012p
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The Group’s sales and EBITDA: GEO split
Annual Report 2011
- The majority of sales both in value and
volume terms in 2011 still came from Russian market:
- c.75% of WMP and c.68% of cheese volumes
produced by the Group were sold in Russia;
- approx. 65% of revenue (63% in 2010) also came
from this market
- In 2011 the Group’s revenue from sales in
Russian market rose by c.12% in comparison with 2010, while the growth of sales in Ukraine amounted only c.2%
- General decline of the consolidated
EBITDA of the Group by c.22% to EUR 34.6 million in 2011 was accompanied by higher EBITDA contribution from Ostankino business
- Ostankino EBITDA rose from EUR 4.3
million in 2012 to EUR 5.7 million in 2011 or by roughly one third on the back of better sales and cost cutting implemented
65% 30% 5% 2011
Russian Federation Kazakhstan Ukraine 40,1 28,9 4,3 5,7 2010 2011
EBITDA contribution, 2010-2011, EUR million
EBITDA Milkiland Ukraine EBITDA Ostankino
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The Group’s sales: segment breakdown
Annual Report 2011
- The revenue split between the business segments
has not changed to much in comparison with 2010:
- 54% of revenue in 2011 (55% in 2010) contributed by
Cheese&butter segment, and
- 36% of revenues (37% in 2010) comprised by the whole milk
products sales;
- Being the No.1 Ukrainian cheese exporter in 2010
and 2011, in the last year the Group increased its share in the cheese market of Russia, a world’s biggest importer of this product to c. 2.8%
- The revenue in Cheese&butter segment advanced
by c.9% to EUR 153.2 million:
- Segment’s EBITDA stood at c. EUR 25.4 million,
representing a 25% annual decrease;
- EBITDA margin declined from 24% in 2010 to 16.6% in 2011
- The sales in the WMP segment grew by c.5% and
amounted to c. EUR 101 million:
- The segment’s EBITDA decreased by c.14%, reflecting
margin squeeze (6.6% vs 8.1%);
- Sales of Ingredients increased by c. 40% to EUR
27.6 million, contributed EUR 3.2 million in EBITDA terms
55% 37% 8% 2010 Cheese&butter WMP Ingredients 54% 36% 10% 2011
725 750 768 2009 2010 2011 Russian cheese market, th. tons, 2009-2011 Cheese sales volume Cheese import
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Financial Results in 2011: P&L perspective
Key P&L financial highlights
- Revenue of the Group grew by c.9% to
- c. EUR 280 million driven by better sales
both in terms of pricing and volumes
- Gross profit depressed by 18% mainly on
a backdrop of de-facto cancellation of the government subsidies to dairy industry in Ukraine and higher raw milk prices in Russia
- EBITDA depressed by c. 22% to c. EUR
34.6 million, while EBITDA margin declined to 12.4% on the back of higher input costs and unfavorable macroeconomic conditions for cheese export to Russia:
- EBITDA loss due to absence of subsidies
estimated at c. EUR 12 million;
- Export EBITDA drop because of Russian Ruble
depreciation in Q3 and Q4 2011 assessed at EUR 3 million
- The Group’s net profit decreased by 33% to
EUR 14.8 million. The net profit margin constituted 5.3% vs. 8.6% in 2010
Annual Report 2011
256 95 44 280 78 35 Revenues Gross Profit EBITDA
Key Financials, 2010-2011
2010 2011 37,1% 17,3% 8,6% 27,9% 12,4% 5,3% Gross Margin EBITDA Margin NP Margin
Key Margins, 2010-2011
2011 2010
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Results of 2011: marketing efforts
Key marketing and branding events
- Further deployment an international Dobryana
brand in the core markets, including revitalization
- f its design:
- Cheese sales were concentrated under this
brand, non-branded sales in this segment were practically eliminated;
- New types of the mould cheese packaging were
implemented, the sales in this category grew by c.13%;
- With the sales under Dobryana brand amounted
- c. EUR 130 million, it became one of the largest
cheese brands in CIS
- Structural improvements in whole milk products
portfolio in 2011 to increase the share of higher value-added products:
- c.18% of less profitable SKU’s, including those in
drinking milk category, were eliminated;
- The sales of recently introduced thermostatic dairy
grew in 2011 by c.40%, their share in the total revenue in WMP segment exceeded 6%
- Concentration of WMP sales under the key
brands:
- WMP sales under key Dobryana and regional
Ostankinskaya brands amounted almost 70%
Annual Report 2011 New brand design and successful promotion of recently introduced products
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Strategic steps were made in 2011
- Development of a sustainable system of raw milk supply: support of milk cooperatives
establishment and increase of in-house milk production;
- Development of an agricultural operations of the Group: acquisition of 4 agricultural
subsidiaries led to increase of arable land bank in lease to c. 21 thousand hectares;
- Preparatory work to commence of Ostankino modernization;
- Elaboration of a design project of construction of 2 modern dairy farms with a total capacity
- f c. 6 thousand of milking cows
Strategic plans for 2012
- To commence an erection of 2 modern dairy farms aiming to increase the in-house milk
production volume in mid-term up to c.40 thousand tons;
- To start the deep modernization of Ostankino;
- To continue support of the milk cooperatives development in order to increase their share
to over 20% in the total raw milk volume intake in Ukraine;
- Further development of the agricultural operations of the Group, including an increase of
arable land bank in lease to c. 30 thousand hectares (by 40%)
Investment budget for 2012
The Group’s investment budget for the current year amounts to about EUR 15 million. The Group is also ready to spend up to EUR 50 million for acquisitions of attractive assets in target markets of Russia, Poland, Belarus or Ukraine
Strategy fulfillment in 2011 and strategic outlook for 2012
Annual Report 2011
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Update on Q1 2012 Results
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Key financial Results of the Group in Q1 2012
Q1 2012 results
Key financial highlights
- Revenue grew by 6% to EUR 67.7 million
driven by better volume sales in the WMP segment, mainly in Russia
- Gross profit depressed by 13% on a
backdrop of higher than in Q1 2011 cost of sales (+EUR 5.6 million q-o-q) caused by differences of transition from “subsidy” to “non-subsidy” system in 2011
- A decline in the gross profit, as well as
rising operating costs contributed to a decrease in EBITDA by 30% to EUR 6.6 million and in EBITDA margin to c.10%
- Net profit decreased by 62% to EUR 1.9
million
- Debt portfolio was lowered by 27%, to
- c. EUR 70 million, after repayment of the
most expensive loans
67,7 15,0 6,6 1,9 63,7 17,3 9,5 4,9 Revenues Gross Profit EBITDA Net profit
Key Financials, Q1 2012- Q1 2011
Q1 2012 Q1 2011 22,2% 9,7% 2,8% 27,2% 14,9% 7,7% Gross Margin EBITDA Margin NP Margin
Key Margins, Q1 2012-Q1 2011
Q1 2011 Q1 2012
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Further development of integrated milk supply chain
Q1 2012 results
- In Q1 2012 the Group made next steps to more
secured affiliated raw milk supply system:
- Development of the diary cooperatives:
- 16 milk cooperatives supported by the Group
practically stabilized the number of members on
- c. 17 thousand but managed to increase a
headcount of milking cows in lease by 7% to c.23 thousand;
- They sourced c.15 thousand tons of raw milk
(more than 20% of the total milk intake in Ukraine)
- The cooperatives now focuses on the
development of motivation schemes for the members based at number of liters of milk supplied
- In particular, such schemes include provision of
loans for procurement of milking cows, cattle forage and milking equipment
- Increase of the in-hose milk production:
- In Q 1 2012 the volume of the in-house milk
production increased by 43% to c. 2.8 thousand tons (c. 4% of total milk intake);
- In order to make a share of in-hose milk material
new steps of the development of in-house milk husbandry have to be implemented (incl. construction of 2 new mega farms)
Cooperatives + In-hose milk production = higher security of milk supply
47% 45% 3% 4% 6% 21% 45% 30% 2011 Q1 2012 Farms Own farms Cooperatives Individuals
Structure of milk supply in Ukraine, 2011-Q1 2012