almarai company · revenue variance 7,300 (171) (78) (41) (30 ) (8) 12 61 90 7,144 6000 6200 6400...
TRANSCRIPT
Almarai Company Interim results – 2nd Quarter 2017
Disclaimer
Information contained in this presentation is subject to change without further notice, its accuracy is not guaranteed and it may not contain all material information concerning the company. Neither we nor our advisors make any representation regarding, and assume no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, to any information contained herein. In addition, the information contains projections and forward-looking statements that reflect the company’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the company’s assumptions are correct. Actual results may differ materially from those projected. This presentation is strictly not to be distributed without the explicit consent of Almarai Company management under any circumstances.
2017 Q2 Earnings Presentation 2 Almarai Company
Solid Q2 YTD results underpinned by turnaround of Poultry
Group Turnover down 2.1% to
SAR 7.1 billion
Group Operating Income up
7.0% to SAR 1.2 billion
Solid Results in Dairy and GCC
market
Weakness in Egypt, Export and
GCC Juice market continue
Net Free Cash flow increased
to SAR 0.2 billion
2017 Q2 Earnings Presentation 3 Almarai Company
1.0
1.1
1.2
1.3
Q2 YTD 16 Q2 YTD 17
Group Operating Profit
Up 7.0%
SA
R in
Bil
lio
n
Revenue Variance
7,300
(171) (78)(41) (30) (8)
12 61
90 7,144
6,000
6,200
6,400
6,600
6,800
7,000
7,200
7,400
Q2 YTD 2016 Devaluation in
Egypt Currency
Juice - GCC GCC Economic
Situation
Export Bakery - GCC Infant Nutrition Poultry - GCC Core Category Q2 YTD 2017
SA
R i
n M
illi
on
(SAR 156 M) / (2.1%)
Growth ---> (2.3%) (1.1%) (0.4%) (0.1%) 0.2% 0.8%(1.4%) 1.2%
2017 Q2 Earnings Presentation 4 Almarai Company
Delivered on Key Focus Areas
2017 Q2 Earnings Presentation 5 Almarai Company
On track for
positive
revenue
growth in
poultry and
key dairy
segments
of Laban
and Zabadi
Delivered
positive
EBIT
results for
poultry
segment for
the first
time
Cost saving and
rationalization
program
continue to
deliver on
expected
benefits
CAPEX
program
reduction is
in line with
the revised
5 year plan
vision
Key projects
including
alfalfa
importation
targets are
running in
line with
expected
delivery
dates
Market Share
2017 Q2 Earnings Presentation 6 Almarai Company
Puffs Juices UHT Laban
Jar Cheese Chicken Fresh Milk Bread
63.8%
66.2%
2016 2017
44.6%
47.2%
2016 2017
18.1% 17.7%
2016 2017
69%
68%
2016 2017
45.2%
40.1%
2016 2017
67.7%
69.2%
2016 2017
65.1% 65.7%
2016 2017
36.3% 36.7%
2016 2017
Statement of Profit and Loss
2017 Q2 Earnings Presentation Almarai Company
SAR million Change Change
Net Sales 3,926 1 0 0 .0 % 3,760 1 0 0 .0 % (4.2%) 7,300 1 0 0 .0 % 7,144 1 0 0 .0 % (2.1%)
Cost of sales (2,405) (61.3%) (2,205) (58.6%) (8.3%) (4,651) (63.7%) (4,412) (61.8%) (5.2%)
Gross Profit 1,521 38 .7% 1,555 4 1 .4 % 2.2% 2,648 36 .3% 2,732 38 .2% 3.2%
Selling and Distribution Expenses (627) (16.0%) (611) (16.3%) (2.4%) (1,247) (17.1%) (1,218) (17.0%) (2.4%)
General and Administration Expenses (123) (3.1%) (114) (3.0%) (7.9%) (247) (3.4%) (223) (3.1%) (9.8%)
Other Expense, net (12) (0.3%) (42) (1.1%) 241.5% (24) (0.3%) (82) (1.2%) 249.1%
Operating Income 759 1 9 .3% 788 21 .0 % 3.9% 1,131 1 5.5% 1,209 1 6 .9 % 7.0%
Exchange Gain / (Loss) 14 0.4% (1) (0.0%) n.a 13 0.2% 11 0.2% (9.6%)
Finance Costs - net (95) (2.4%) (98) (2.6%) 4.0% (168) (2.3%) (199) (2.8%) 18.5%
Share of Results of Associates and Joint Ventures 5 0.1% (3) (0.1%) n.a 6 0.1% (2) (0.0%) n.a
Profit Before Zakat and Income Tax 683 1 7.4 % 686 1 8 .2% 0.4% 981 1 3.4 % 1,020 1 4 .3% 3.9%
Zakat and Foreign IncomeTax (26) (0.7%) (21) (0.6%) (19.1%) (40) (0.5%) (33) (0.5%) (16.2%)
Profit for the Period 657 1 6 .7% 664 1 7.7% 1.1% 942 1 2.9 % 987 1 3.8 % 4.7%
Profit Attributable to Non Controlling Interest 2 0.0% 10 0.3% 537.7% 5 0.1% 16 0.2% 209.1%
Profit Attributable to Shareholders 658 1 6 .8 % 674 1 7.9 % 2.4% 947 1 3.0 % 1,002 1 4 .0 % 5.8%
Earnings Per Share (Basic) 0.81 0.82 1 .1% 1.15 1 .20 4.2%
2nd Quarter 2nd Quarter YTD
2016 20172016 2017
7
% to Sales
2nd Quarter YTD 2017 Results
Operating Performance
36.3% 38.2% 15.5% 16.9% 13.0% 14.0% 1.9 pp 1.4 pp 1.0 pp
2,648 2,732
2nd Qtr YTD
2016
2nd Qtr YTD
2017
SAR Million
Gross Profit
+84
+3.2%
1,131 1,209
2nd Qtr YTD
2016
2nd Qtr YTD
2017
SAR Million
Operating Income
+79
+7.0%
947 1,002
2nd Qtr YTD
2016
2nd Qtr YTD
2017
SAR Million
Profit Attributable to Shareholders
+55
+5.8%
2017 Q2 Earnings Presentation 8 Almarai Company
Strong Domestic Performance
Dairy & Juice
Turnover SAR Billion
5.4 0.9 0.7 0.1
(3.9%) (0.8%) 8.3% 15.4%
Bakery Poultry Others Total
0.9 0.2 (0.0) (0.0)
(10.3%) 0.8% 80.1% 25.1%
17.3% 16.9% (4.8%) (63.5%) Net Income
Margin SAR Billion
Net Income SAR Billion
7.1
(2.1%)
1.0
5.8%
14.0%
2017 Q2 Earnings Presentation 9 Almarai Company
Dairy & Juice
o Laban and Zabadi have continued to grow however
fresh milk growth has stabilized.
o Egypt devaluation impact accounts for 3.0% within D&J
segment.
o Economic situation in the GCC had an adverse effect on
the bottom line for June
o Higher cost of alfalfa is significantly impacting
profitability growth.
1,045.3 937.6
500.0
600.0
700.0
800.0
900.0
1,000.0
1,100.0
Q2 YTD 16 Q2 YTD 17
Net Income
2017 Q2 Earnings Presentation 10 Almarai Company
SAR in
Million
Bakery
o Revenue down 0.8%, it has however declined by 5.2% in
Q2
o Bread, Puff and Croissant growth has stalled
o Product revamp for key categories is underway
o Margin improvement supported by
• Manufacturing efficiencies (mainly Hail plant)
• Cost saving
• Innovation
o Key challenge for next half
• Improve profitability and market share
151.3
152.4
150.0
151.0
152.0
153.0
Q2 YTD 16 Q2 YTD 17
Net Income
2017 Q2 Earnings Presentation 11 Almarai Company
SAR in
Million
Poultry
Poultry EBIT break even for the first time during the
quarter
o Revenue up 8.3% driven by strong volume growth
o Poultry mortality continues to be within the target range
for world best practice.
o Q3 is expected to be EBIT negative due to seasonality
trends however current operations remain on target to
achieve + EBIT for the year before any adverse impact
from GCC economic situation.
(180.5)
(35.9)
(200.0)
(100.0)
0.0
Q2 YTD 16 Q2 YTD 17
Net Income
2017 Q2 Earnings Presentation 12 Almarai Company
SAR in
Million
Others
o IPNC losses are in line with existing business plan.
• Losses have reduced by 32% plus from last year
o Expansion of Alfalfa operations in both South and
North America remains on track.
• Operations are still loss making but losses have
reduced significantly from last year as the
investment cycle reduces
(69.1)
(51.8)
(100.0)
(50.0)
0.0
Q2 YTD 16 Q2 YTD 17
Net Income
2017 Q2 Earnings Presentation 13 Almarai Company
SAR in
Million
Sales Analysis by Segment by Product – Q2 YTD
Note: All Amounts in Million Saudi Riyals
Total
Net Sales
Net Sales
By Segment
Bakery
904 (13%)
(-7)
Poultry
744 (10%)
(+57)
Others
82 (1%)
(+11)
(0.8%) +8.3% +15.4%
Fresh Dairy
2,989 (42%)
(-39)
Long-Life Dairy
722 (10%)
(-29)
Fruit Juice
758 (11%)
(-167)
Cheese&Butter
946 (13%)
(+17)
Bakery
904 (13%)
(-7)
Poultry
744 (10%)
(+57)
Other Sales
82 (1%)
(+11)
(1.3%) (3.8%) (18.1%) +1.9% (0.8%) +8.3% 15.4%
Net
Sales
By Product
7,144
(-156)
Dairy & Juice
5,415 (76%)
(-217)
(3.9%)
(2.1%)
2017 Q2 Earnings Presentation 14 Almarai Company
Sales Analysis by Region by Country – Q2 YTD
Note: All Amounts in Million Saudi Riyals
2017 Q2 Earnings Presentation 15 Almarai Company
Total
Net Sales
Net
Sales
By Region
KSA
4,705 (66%)
(+49)
+1.1%
KSA
4,705 (66%)
(+49)
UAE
709 (10%)
(+9)
Oman
372 (5%)
(+7)
Qatar
325 (5%)
(-35)
Kuwait
359 (5%)
(+21)
Bahrain
155 (2%)
(+8)
Egypt
291 (4%)
(-186)
Jordan
137 (2%)
(+2)
Others
91 (1%)
(-31)
Growth in Saudi Riyals +1.1% +1.3% +1.9% (9.8%) +6.2% +5.2% (38.9%) +1.6% (25.5%)
Growth in Local Currency 33.6%
Net
Sales
By Country
7,144(-156)
(2.1%)
Other GCC Countries
1,920 (27%)
(+9)
Other Countries
519 (7%)
(-214)
+0.5% (29.3%)
• Manufacturing, Farming and Replacement spent CAPEX of SAR ~0.9 Billion for various capacity expansion projects.
• Sales depot, Poultry and Logistics expansion accounted for SAR ~0.4 Billion.
• Replacement and other CAPEX including IDJ accounted for another SAR ~0.3 Billion.
Almarai continues 5 Year Plan CAPEX Investment CAPEX spend for the 2nd Quarter Year to Date 2017 was SAR 1.6 Billion.
Transport & Workshop Cheese Plant Expansion 40MW Power Plant Cheese Plant - Transformers
2017 Q2 Earnings Presentation 16 Almarai Company
Cash Flow Bridge – Rolling 12 Months
2017 Q2 Earnings Presentation 17 Almarai Company
364
4,975 66
(4,278)
(718)
53 463
Cash at 30
June 2016
Operating Cash Flow
CAPEX / Biological
AssetsDividend Others
Cash at 30
June 2017+ SAR 99 Million
Loans Issues /
Payments / Charges
Net Debt
2017 Q2 Earnings Presentation 18 Almarai Company
4,606 6,653 8,237 8,053 8,762 9,344 10,889 10,883 11,668
74%
98% 101%
75% 75% 74% 81% 81% 85%
2.2x
2.8x
3.1x 3.0x
2.8x 2.7x
2.7x 2.7x
2.9x
0%
50%
100%
150%
200%
250%
300%
350%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2010 2011 2012 2013 2014 2015 2016 2016 Last 12
Months
Net Debt Net Debt / Equity Ratio Net Debt / EBITDA
SA
R M
illi
on
SOCPA IFRS
Quarterly Performance – Net Income
# IFRS revaluation adjustments
* Capital gain of SAR 47m in 2012
234 235 242 255
274
306 309 328 343 349
380
398 433
530
629
674
363
425 430
450
476
539
595
655
249
284 286
369 373
428
484 489
0
100
200
300
400
500
600
700
800
SA
R M
illio
n
2017 versus 2016
Q 1 = 13.7%
*#
289
Q2 = 2.4%
#658
2017 Q2 Earnings Presentation 19 Almarai Company
EBIT and EBITDA margins are starting to improve… Net Sales, EBITDA and EBIT Evolution
2017 Q2 Earnings Presentation 20 Almarai Company
6,931
7,951
9,883
11,219
12,606
13,79514,699
14,339 14,18321.1%
19.1%
16.9%
16.0%15.8%
16.4%17.3% 17.5%
18.2%
27.2%
25.6%
24.2% 24.4% 23.9% 24.2%
25.3%25.9%
26.9%
2010 2011 2012 2013 2014 2015 2016 2016 Last 12 Months
SA
R M
illio
n Net Sales
EBIT % to Net Sales
EBITDA % to Net Sales
CAGR 2010 – 2017: 11.6% (w/o impact of acquisitions 7.7%)
SOCPA IFRS
Key Share Data
Share Price (SAR) 92.00
Current P/E Ratio (ttm) 35.82
Earnings Per Share (SAR) (ttm) 2.59
Market Cap (SAR Million) 74,336
Shares Outstanding (Million) 800
Dividend Indicated Gross Yield 0.97%
Key Statistics for Almarai (4 July 2017)
2017 Q2 Earnings Presentation 21 Almarai Company
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