OSOTSPA Analyst Meeting Opportunity Day Q1 19 Q1 19 Financial - - PowerPoint PPT Presentation

Analyst Meeting

Q1’19 Financial Performance

Opportunity Day Q1’ 19

28 May 2019

OSOTSPA

Disclaimer

Statements included or incorporated in these materials that use the word “believes”, “anticipate”, “estimate”, “target”, or “hope”, or that otherwise relate to the objectives, strategies, plans, intentions, beliefs or expectations or that have been constructed as statements as to future performance or events, are “forward-looking statements” within the meaning that are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated at the time the forward-looking statements are made. Osotspa Public Company Limited (“OSP” or the “Company”) undertakes no obligation to publicly update or revise any forward-looking statement, whether as result of new information, future events or otherwise. OSP makes no representation and assume no liabilities against whatsoever about the opinion or statements of any analyst or other third party. OSP does not monitor or control the content to third party opinions or statements and does not endorse or accept any responsibility for the content or the use of any such opinion or statement. The information contained herein has been obtained from sources that the Company considers reliable, but the Company does not represent or warrant that the information is complete or accurate, in particular with respect to data provided by or regarding third parties. The information in the presentation does not purpose to be comprehensive or to contain all the information that a prospective investor may desire or require to decide whether or not to purchase securities of the Company. The information in the presentation might be incomplete or summarized and has not been independently verified and will not be updated. Such information may in the future be subject to audit, limited review or any other control by an auditor or independent party. Therefore, the information included in the presentation may be modified or amended in the future. The information in this presentation, including but not limited to forward-looking statements, applies only as of the date of this document and is not intended to give any assurances as to future

• results. The Company and each of its agents expressly disclaims any obligation or undertaking to update or release any updates or revisions to the information, including any financial date and any forward-looking

statements, contained in this [presentation[. This presentation includes forward-looking representations or statements on purposes, expectations or forecasts of the Company or its management up to the date of release of this document. Said forward-looking representations and statements or forecasts are mere value judgments of the Company and do not imply undertakings of future performance. Additionally, they are subject to risks, uncertainties and other factors, which were unknown or not taken into account by the time this document was produced and released and which may cause such actual results, performance or achievements, to be materially different from those expressed or implied by these forward-looking statements. Moreover, these forward-looking statements are based on numerous assumptions (which are not stated in the presentation) regarding the Company’s present and future business strategies and the environment in which the Company expects to operate in the future. There are many factors, most of them out

• f the Company’s control, which may cause the Company’s actual operations and results to substantially differ from those forward-looking statements. Accordingly, you should not place undue reliance on forward-

looking statements due to the inherent uncertainty therein. Certain financial and statistical information contained in this document is subject to rounding adjustments. Accordingly, any discrepancies between the totals and the sums of the amounts listed may be due to

• rounding. In additional, certain figures contained in this document, which have also not been subject to financial audit, are combined and pro forma figures. The information and opinions in this presentation are

not based upon a consideration of your particular investment objectives, financial situation or needs. You may wish to seek independent and professional advice and conduct your own independent research and analysis of the information contained in the presentation and of the business, operations, financial condition, prospects, status and affairs of the Company. This presentation discloses neither the risks nor other material issues regarding an investment in the securities of the Company. The information included in this presentation is subject to, and should be read together with, all publicly available information. Any person acquiring securities of the Company shall do so on their own risk and judgement over the merits and suitability of the securities of the Company, after having received professional advice or of any other kind that may be needed or appropriate but not only on the grounds of this presentation. By delivering this presentation, the Company is not providing any advisory, purchase or sale recommendation, or any other instrument of negotiation over the securities or financial instruments of the Company. This presentation does not constitute or form part of, and should not be construed as, any offer, inducement, invitation, solicitation or commitment to purchase, subscribe to, provide or sell any securities, services or products or to provide any recommendations for financial, securities, investment or other advice or to take any decision. This presentation is not and shall not constitute an offer for the sale of securities in Thailand or any jurisdictions. By attending to or receiving this presentation you agree to be bound by the foregoing restrictions and limitations and acknowledge that you understand the legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of the presentation.

Agenda

Company Overview 2019 Outlook Core Strategies Updates Financial Performance and Activities Updates

OSOTSPA’s 128 Years of History

4

 Expanded to Women’s

Beauty Care under brand “Twelve Plus”

 Launched our Flagship

M150

 1st introduction of ED in

Thailand, with Lipovitan-D from Japan

 Expanded to Baby

Care under Brand “Babi Mild”

 Launched Vitamin C

Drink under Brand C-Vitt from Japan

 Launched RTD Coffee

under Brand M-Presso

 Listed in Stock Exchange

• f Thailand

1891 1965 1985 1989 1992 2016 2018 2012 …A move toward International Standards Established pharmaceutical company in Bangkok, known as “Teck Heng Yoo”

 Business Restructuring and Transformation  Strengthened the Company with a professional

team of BOD and executives with extensive experiences from various multinational companies

>20 Years

(as of December 2018) Management Experience in the Industries

Product Portfolio

5

Beverage Personal Care Healthcare and Confectionary OEM

6

Our Strengths and Strategies

Leveraging on solid strengths of our core businesses… … To expand and enhance our position further

Broad and highly recognizable portfolio of brands with established presence across product lines

1

Well established “CLM” presence

2

Highly penetrated and robust distribution network

3

Strong R&D team with deep local insight

4

Fully integrated, highly scaled and flexible manufacturing allowing for cost competitiveness and high margin

5

Experienced board of directors and management

6

Strengthen domestic presence in broader non- alcoholic beverages and expand personal care

1

Leverage market-leading position in Thailand to sustain and expand to other regional and

• verseas markets

2

Focus on cost efficiency and margin enhancement through the “net revenue management” principle

3

Continuous investment in human capital and innovation capability

4

Our overall objective is to leverage our business strengths to grow faster than the market and also improve our margins

Experienced board of directors

Our board(1) comprises of…

Former/current Presidents/CEOs, Senior level former public servants Surin Osathanugrah Chairman of the Board

Vice Chairman of Safety Insurance Public Company Limited Somprasong Boonyachai Vice Chairman of the Board / Independent Director

Chairman of Advanced Info Service Public Company Limited, Director

• f Intouch Holdings Public Company Limited

Kannikar Chalitaporn Vice Chairman of the Board

Commercial Bank Krik Vanikkul Independent Director

at the Bank of Thailand

From Families

7

From External Directors

7

OSP President

1

Penchun Jarikasem Independent Director and Chairman of the Audit Committee

Former CFO of PTTEP Sinee Thienprasiddhi Independent Director

Dusit Thani PCL Sethaput Suthiwartnarueput, Ph.D Director

at the Bank of Thailand Salin Pinkayan Independent Director

Ltd, Managing Director of Thai Developer Co., Ltd. Founding family members >32 Years of experience in the industry

7

Experienced Management

Our select management has …

23

Years of experience in the industry On average Global MNC experiences Petch Osathanugrah Chairman of Executive Committee & CEO

member of Bangkok University, Director of Shiseido (Thailand) Co., Ltd. Wannipa Bhakdibutr President

Personal Care Products Marketing) at Unilever Thai Trading Co., Ltd. Porntida Boonsa Chief Financial Officer

Ltd.

with MNCs Rob Rijnders Chief International Business Officer

Thai Holdings Co., Ltd. Suthipa Panyamahasup Chief Marketing Officer

Thai Trading Co., Ltd. Sarayut Jitcharoongphorn Chief Customer Management Officer

Head of General Trade Customer Development at Osotspa Nukit Chonlacoop Chief Manufacturing Officer

Global Project Advisor and the Manager of Block 3/4 Operation at Esso (Thailand) PCL Viwat Krisdhasima, Ph.D Chief Supply Chain Officer

Independent Director at Zarina Group PCL and Shera PCL,

3

from Founding Families Members Vilairat Charoenwongse-Phelan Chief Research and Development Officer Joined Osotspa: 2018 / Years in the industry: 22

Company USA, R&D Director at Pinnacle Food, USA, Senior R&D Program Manager at PepsiCo North America

8

A Suite of Iconic Brands Enables us to Implement the Portfolio Strategy

9 12 Baht

Energy Drink Electrolyte Drink RTD Coffee

Functional Drinks

Baht/Bottle

(Mass Market) (Premium Market)

10 Baht 15 Baht

*Target Female Consumers

1

Health benefits from the lactobacillus contained *Target young consumer, Age 18-35 years Vitamin C Benefits from Soy Peptide for cognitive and health benefits * Target young consumer, Age 18-35 years

2

Launch in Feb 2018

* Launch in Aug 2018, Adding Herbal Benefits #1 Energy Drink Brand in Thailand *Target Adult age more than 40 years

25+ Baht

Brain and Body Boost

Wake-Me-Up Drinks Look-Good-Feel-Good

(38 Baht) (15 Baht) (10-20 Baht)

*Regional Brand, strong in North and South

1

Launch in Feb 2019

Product Portfolio – Personal Care

10

Twelve Plus Fragrance Products Twelve Plus Talcum Twelve Plus Skin Cleansing Twelve Plus Specialty Products Babi Mild Lotion and Moisturizer Babi Mild Baby Home Care and Fabric Care Babi Mild Baby Bath Babi Mild Baby Bar Soap Babi Mild Baby Talcum

1 2 1 2

BABY CARE

1

WOMEN’S BEAUTY CARE

2

Distribution Network is One of Our Key Assets

11 Traditional trade Modern trade Cash van & Vending Machines Distributors

Strengths

personal care products

products

retailers and consumers

Point of sales

vending machines

Proportion of sales

Different product nature requires different distribution mix

78%

Beverage

38%

Personal care

62%

Beverage Personal care

22%

Close to 100% distribution for flagship products

95%

(1)

95%

(2)

Capture Attractive Growth in International Landscape

12

Country Channel

 Leverage strong brand identity and portfolio,

coupled with geographic+ cultural proximity to grow in CLMV markets

 Ensure deep market penetration by

working closely with leading local distributors / partners



Category

 Launch tailored energy and functional

drinks, aiming to become a regional leader in these categories

 Grow in Personal Care products by

leveraging brand strength and launching new product ranges

 

Triple “Win” Strategy

Overseas revenue contribution from International Markets

Domestic beverage & personal care 83% Domestic personal care 0% International beverage 16% International personal care 1% Establishing local manufacturing facility through JV with Loi Hein and backward integration into manufacturing and set up distribution routes to cover untapped regions

2 1 1

Flexible manufacturing platform, with fully integrated beverage value chain, allowing for cost competitiveness and high margin

13

3 Glass Plants

Beverage Mixing and Filling Plants

3 1 Cullet Plant 1 Labelling Plant 2

Personal Care Plant

Fully integrated value chain with capacity headroom…

 Fully integrated, with one of the

largest glass bottle manufacturing capabilities in Thailand, with practical capacity of 471,000 tons / year

 Capacity headroom, that can drive

future growth with limited capex

Margin Strategy: Our Margin Improvement Programs

14

Key e&ples Continuous Efforts to Enhance Return on Assets and overall Profitability

Identify savings on cost of raw materials and packaging materials

1 2 3 4

Identify savings from our logistics network

• ptimization)

Reduce administrative expenses

• pportunities for savings

Planning to expand the scope of the program to cover manufacturing operations

Improve cost efficiency

Objectives



New formulation of M150 that optimizes costs as well as appeal to consumers’ preferences



New glass furnace in Ayutthaya which will be functional in second half of 2018 would add to the operational and cost efficiency

Implementation Use of proceeds



Enhance margin



Reinvest in the business



Returns to shareholders



Key examples



Sourcing strategy for glass cullet that minimizes the impact of the increasing trend of glass cullet price



Implementation of Net Revenue Management(1) for achieving sustainable and profitable growth

Agenda

Company Overview 2019 Outlook Core Strategies Updates Financial Performance and Activities Updates

Production Efficiency – New facilities

• New glass factory (SGA2)
• New factory in Myanmar
• New cullet treatment lines
• Total Productive Maintenance

(Increase capacity without major investment in new production line)

Core Strategies Updates

Strengthen domestic presence in broader non-alc. beverages and expand PC Leverage market-leading position in Thailand to sustain and expand to

• verseas markets

Focus on cost-efficiency and margin enhancement through NRM principle

Maintain Energy Drink Market Share (Value) : Q1’19

53.7%

Grow Functional Drink Market Share Q1’18  Q1’19

28.3%35.6%

Personal care sales growth in Q1’19 :

+6.4%

Total CLMV sales growth for Q1’19 (at constant FX):

+11.8%

International PC sales growth For Q1’19:

+31.6%

OEM Bottle sales – Improve margin

• verall beverage by sharing fixed costs

Q1'18 Q2'18 Q3'18 Q4'18 Q1'19

Fit Fast Firm

Q1’19 GM = 34.8%

+270bps YoY

+44.5%YoY

Continued impact in Q1’19: Bev CLM sales growth for Q1’19 (at constant FX):

+10.7%

2019 “Fit Fast Firm” Project ►Reap benefits from projects implemented in 2018 ►Increase efficiency through new cullet treatment lines ►New lighter weight bottles ►Warehouse and distribution optimization ►OEM-PC initiatives

16

Agenda

Company Overview 2019 Outlook Core Strategy Updates Financial Performance and Activities Updates

2019 Core Outlook

18

Company Target and Strategy 2019 Net sales growth: mid-single digit growth Profitability Improvement Consistent with mid-term business plan Domestic Beverage:

• Continue to focus on

herbal benefit and NPDs for functional drinks

• Further strengthen Som In-

Sum, Chalarm Black Galingale, and C-Vitt

• Expect to add 2-4 NPDs

Domestic PC:

• Strengthening key brands

and launching new PC pillars (facial/skin care)

International:

• Continue to expand in CLM

Myanmar highlights:

• Implement route-to-market

model / Strengthen Shark MM / Further build M-150

• Manufacturing Facility to be

completed by end-2019

Supply Chain Services:

• Expect recovery in OEM

Beverage sales throughout 2019

Fit Fast Firm:

• Embarked on various cost-saving

programs

Improved Bev GM:

• Cost efficiency improvement after

commission SGA2 (expect to complete in Mid-2019)

Improved PC GM:

• Improvement driven by product

mix transition

Other Growth Initiatives

19

China: Vietnam:

• Fantastic growth in recent years

with more potential to come

• Population: 90mn (1/3 is

Urban)

• Vienam PC:

Contract signed, products are

• n main shelf
• Vietnam Beverages:

In progress of doing detailed market study with potential partner to ensure the best possible entry strategy for our beverages products.

Vending Machine (in Thailand):

992 3,095 2009 2010 2011 2012 2013 2014 2015 2016 2017

Energy Drink Market Size (mn Liters)

24.8 13.8 11.2 9.5 7.1 6.9 2.2 US Japan UK Thailand Vietnam Germany China

Energy Drink Consumption (litre/person/year)

8,571 21,110 2014 2015 2016 2017 As of Nov'18

Thai Vending Machine Market (# machines)

33,000 450,000 Y0 Y5 Y8 Y10

Future Growth for China (# machines)

>13X growth CAGR = 25% CAGR =8 %

Agenda

Company Overview 2019 Outlook Core Strategies Updates Financial Performance and Activities Updates

• Net profit* +6% vs.

2017

• Net profit margin**

at 12.0% vs. 11.2% in 2017

FY2018 Financial Highlights – by Segment

12M18 Normalized sales -0.7% YoY, dragged by OEM sales

21

• Myanmar +11.1%

(at constant FX). With FX impact, sales flat at +1.4%

• PC Int’l sales grew

+42.8% YoY in FY2018

• 2018 sales dropped

from lower OEM and absence of Unicharm sales

• 2H18 OEM bottle

sales increase by 29% from 1H18 (after completion of cold tank repair)

• Babi Mild

+10%

• Twelve Plus +7%
• Increased from various

NPDs along the period and promotional activities

• Som In-Sum +109%
• C-Vitt

+75%

• M-Presso launched in

Feb 2018

• Launch of Chalarm

Black Galingale turnaround Chalarm from -15% Pre-launch to +18% Post Launch

+6% vs. 2017 12.0%

Net Profit Margin**

Remark : * Net Profit attributable to owners of the parent ** Net Profit margin to Total Revenue *

Dividend Payment and Policy

Dividend Paid (after IPO)

• Interim Dividend 0.30 Baht paid on 28 Feb 2019
• Final Dividend

0.39 Baht paid on 23 May 2019 Dividend policy

• At least 60% of consolidated net profit after deducting the legal reserve

specified by law or Articles of Association of the Company

Nonetheless, the consideration of a dividend payout shall depend on the Company’s performance, financial position, cash flow, contractual obligations (i.e. loan payments), working capital, investment plans, general economic situation, and related factors as deemed appropriate by the Board of Directors and when in compliance with the laws & regulations.

22

Q1’ 19 Financial Highlights – by Segment

• Net profit* +13.4% YoY
• Net profit margin** at

14.0% vs. 12.8% in Q1’18

• Favorable GM at 34.8%

improved by 270 bps YoY from “Fitness First” project driving overall costs down

• CLMV

+11.8% at constant FX, reported Net sales +0.8%

• PC Int’l sales +31.6%

mainly from Babi Mild launch in Vietnam

• OEM +13.8%

driven by OEM-Bottle sales (+44.5% YoY & 4% QoQ) after completion of cold tank repair in Q2’18, however partly offset with OEM-PC

• Healthcare 19.5%

driven by Banner and Tard 4

• Twelve Plus +22.2%

driven by momentum of Cool Powder and Perfume Mist launched last year.

• Babi Mild -7.8%

driven high last year stock build-up to prepare for company name change

• C-Vitt

+148.9% maintained no. 1 position in functional drinks for 3 consecutive quarters since Q3’18

• Chalarm

+25.7% continued strong growth momentum of Chalarm Black Galingale

• Som In-Sum

+21.6%

• Peptein Launched Peptein

Plus (NPD) in Feb’19

Thailand Beverages

Net Sales: THB 4,388M

4.0%

Thailand Personal Care

Net Sales: THB 564M

3.4%

Others (OEM/ Health care/ Confectionary)

Net Sales: THB 397M

19.2%

International

Net Sales: THB 1,018M

0.3%

At constant FX:

8.6 %

Net Profit*

THB 888M

14.0%

Net Profit Margin**

Remark : * Net Profit attributable to owners of the parent ** Net Profit attributable to owners of the parent to Total Revenue from Sales

Total Revenue from Sale 6,366M (+4.2%YoY)

driven by Energy Drinks-Herbal Variants, C-Vitt and OEM-Bottle sales

23

([VALUE] ) ([VALUE] ) ([VALUE] ) ([VALUE] ) Q1'18 Q1'19 [CELLREF] [CELLREF] [CELLREF]

1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400

Q1'18 Q4'18 Q1'19

783 888 12.8% 14.0%

7.5% 8.5% 9.5% 10.5% 11.5% 12.5% 13.5% 14.5% 100 200 300 400 500 600 700 800 900 1,000

Q1'18 Q1'19 To the owner of the parents

24

Total Revenue Growth 2.7%

Revenues Gross Margin SG&A Net Profit

Q1’19 Financial Highlights

Admin Exp Selling Exp  Net Profit Margin

[CELL REF] [CELL REF]

Q1'18 Q1'19

+2.7% +0.3%

(1,262) (1,322)

 Other Income (20.7%) (20.8%)

Net Sales Analysis: Thai Beverages

Marketing Activities – TVC/online

PEPTEIN PLUS

Q2’19 Activities Update

Beverage: New LINE Official Account for M-Point collection campaign

Q2’19 Activities Update

Beverage: New Packaging to expand target customers and occasions

Personal Care: New Product Range and Organic Range Launched

Q2’19 Activities Update

Confectionary: Ole New Flavors and New Packaging

Q2’19 Activities Update

New Facilities Update

29

Brick Laying Ceremony for New Glass Plant (SGA2)

Myanmar Update

JAN’19 FEB’19 Mar’19

Construction Thilawa progress is on track

30

Thilawa Site

Q&A

IR Contact

Email: ir@osotspa.com Tel: 02-351-1152

Thank you