delta hy2010 analyst presentation
TRANSCRIPT
1. WELCOME AND INTRODUCTION
2. SIX MONTHS VOLUMES AND FINANCIALS
3. BUSINESS REVIEW 6 MONTHS TO 30 SEPTEMBER 2010
4. DISCUSSION/QUESTIONS
5. REFRESHMENTS
JOE MUTIZWA
ROB MAUNSELLMATTS VALELA
JOE MUTIZWA
ALL
ALL
INCREASEINCREASEVs SEPTEMBERVs SEPTEMBER
2009 2009 Lager BeerSorghum BeerSparkling Beverages
Total Beverages
47%(4%)63%
16%
Plastic 33%
STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS
SEPTEMBER 2010US$000’s
SEPTEMBER 2009 US$000’s
Turnover 214 498 142 510
Operating Income – Continuing Operations 2 7 195 15 048
Loss on disposal of discontinued operations - (111)
Net Finance expense (1 198) (160)
Gain on Acquisition of Associates 1 325 -
Associates – Share of Loss (366) (115)
Profit Before Tax from continued operations 26 954 14 662
Tax (6 488) (4 566)
Profit from continuing operations 20 466 10 096
Loss from discontinued Operations - (617)
Total comprehensive Income 20 466 9 479
SEPTEMBER
2010 2009
Operating income to net sales from continuing operations
Operating Income to net sales from all operations
17,6%
17,6%
14,3%
13,6%
SEP 2010 SEP 2009
From continuing and discontinued
operations
Normal EPS – Cents 1,71 0,83
Fully Diluted EPS – Cents 1,65 0,78
From continuing operations
EPS - Cents1,71 0,89
Fully Diluted EPS Cents 1,65 0,83
Dividend per share – cents 0,50 -
ASSETS2010
US$000’s2009
US$000’s
Non-current assets
Property, plant and equipment 186 956 133 924
Investments, loans and trademarks 12 276 5 819
199 232 139 742
CURRENT ASSETS
Inventories 54 550 40 393
Trade and other receivables 38 224 23 209
Discontinued Operations - 4 000
Bank balances and cash 6 129 4 901
TOTAL CURRENT ASSETS 98 903 72 503
TOTAL ASSETS 298 135 212 246
EQUITY AND LIABILITIES 2010US$000’s
2009US$000’s
Share Capital 11 802 -Share Premium 17 707 29 364Reserves 150 521 97 660Non-controlling Interests 3 184 5 993Shareholder’s equity 183 214 133 017
Deferred taxation 23 898 32 409
CURRENT LIABILITIESShort-term borrowings 23 000 5 315Interest free liabilities 68 023 41 505TOTAL CURRENT LIABILITIES 91 023 46 820
TOTAL EQUITY AND LIABILITES 298 135 212 246
1. VOLUME PERFORMANCE REVIEW BY
PRODUCT CATEGORY
1. Significant Market Share Growth across all beverages
2. Strong Demand for Lagers and Soft Drinks for the Six Months and Continuing to third quarter
4. Sorghum beer volumes decline as consumers switch to lagers. The loss slowed down in the second quarter as the Shake Shake pack recovered.
3. Under supply for both beer and Soft Drinks due to capacity constraints
668618
550 574
274
491
724
0
100
200
300
400
500
600
700
800
F05 F06 F07 F08 F09 F10 F11
000 hls The highest Half Year Volume since 1998
1747 16981537
1388
881
1616 1547
0
500
1000
1500
2000
F05 F06 F07 F08 F09 F10 F11
000 hls
651
558
322 326
157
299
488
0
100
200
300
400
500
600
700
F05 F06 F07 F08 F09 F10 F11
000 hls
2398 2536
1923
1451
930
2133
2834
0
500
1000
1500
2000
2500
3000
F05 F06 F07 F08 F09 F10 F11
Tonnes Best Ever
20%
67%
13%
Sep-09
Lager Sorghum Soft Drinks
23%
56%
18%
Sep-10
Lager Sorghum Soft Drinks
SHIFT IN BEVERAGES VOLUME CONTRIBUTION SIX MONTHS TO SEP ‘09 VS. SIX MONTHS TO SEPT ‘10
23%
77%
Sep-09
Lager Sorghum
32%
68%
Sep-10
Lager Sorghum
VOLUME CONTRIBUTION BEER CATEGORY
2. THE DRIVE FOR MARGIN EXPANSION
+16%
+51%
+82%
+115%
0
20
40
60
80
100
120
140
Beverage Volumes Turnover EBIT Att.Income
% Growth Key Drivers1. Disposal of loss making businesses2. Product mix - - shift to higher margin products3. Reduction in maintenance costs as new capacity kicks in4. Supply Chain Savings5. Improved Efficiencies - still to play out
LEVERAGING OUR GROWTH: 6 MONTHS TO SEPTEMBER VS. PRIOR YEAR
13.6%15.3%
17.6%21%
0
5
10
15
20
25
Hl F10 FY F10 Hl F11 FY F11
September 2010
EBIT MARGIN EXPANSION
L.T goal 23-25% Range 400 Basis Points Gain since September 2009
2. UPDATE ON RECAPITALIZATION SINCE DOLLARIZATION
CAPITAL INVESTMENT PROGRAMME F10 AND F11
F10 ACTUAL SPEND F11 CAPEX TWO YEARS COMBINED
TOTAL: $47,6m H1: $35,2m F.Yr $72,7m $120,3m
1. Plant & Equipment: $34.5m Plant & Equipment: $47.4m $81,9m
2. Containers: $13,1m Containers: $25,3m $38,4m
KEY PROJECTS
• Southerton Lager Beer Packaging Line
KEY PROJECTS
• PET packaging line at Graniteside
• Lager Beer Packaging Line at Belmont in Byo
• C02 Plant in Bulawayo
IMPACTS• Lager Beer Capacity
adequate until F14.• Soft Drinks Capacity
still needs upgrading in F12
• Investment in Containers will continue
N
HECTOLITRES RELIABLE CAPACITY
ANNUAL VOLUMES
CAPACITY UTILIZATION
LAGER BEER
SOFT DRINKS
CHIBUKU/SORGHUM
TOTAL
2,000,000
1,400,000
5,500,000
1,553,000
1, 143 000
3 250 000
78%
82%
59%
8 900,000 5,946,000
Soft Drinks RGB packaging lines not entirely reliable. New USD12m line planned for Graniteside by July/August 2011
67%
4. NEW PRODUCT LAUNCHES
1. BEER
1.1 Golden Pilsener• Relaunched Golden Pilsener in the green 340 ml bottle and
repositioned it as a Local Worthmore offering with higher price and higher margins
• Hugely successful
1.2 Castle Light• Launched Castle Light using the 330ml one way imported
bottle to counter Competition• Since September launch this brand has now climbed to 2% of
total lager beer volumes.
2. SPARKLING BEVERAGES
2.1 PET Range • Launched In July in 500ml and 2 litre for all core brands• Recently launched full range of mixers in PET• Shortly launching Sparkling flavoured waters• PET Contributed 11% to soft drink volumes in October
2.2 Launch of Burn• Launched the energy drink in the imported 250ml can in
October
5. SUPPLY CHAIN UPDATE
1. Barley 20 000 tonnes delivered to date. We expect +/- 28 000 tonnes. Full cover in hand with room for barley malt exports
2. MaizeSecure to end January. Thereafter we import
3. Carbon DioxideSecure. Vast improvement as suppliers compete
4. Returnable Glass Bottles Secure on 100% imports
5. SugarWill rely largely on imports. Global prices rising. Now at a 30 year high.
6. UtilitiesRemains our greatest risk
6. UPDATE ON ASSOCIATES
6.1 Schweppes Zimbabwe Limited • Volumes for nine months to September 65% higher than prior
year• Market Share around 65-70% of the cordials and squashes sector• Profitability in line with expectations. For full year to December
the business should make $5,5m EBIT
6.2 African Distillers• The business is in recovery mode following positive changes to the
excise regime in the July Mid Term Fiscal Statement. The playing field has been levelled as of September 2010.
• A restructuring has taken place with the head count reduced by 35% and payroll slashed by 45%
• Volumes in October were 3% ahead of prior year and above break even point.
• The business will return to profitability in the 2011 financial year.
7. OUTLOOK FOR BALANCE OF YEAR
• Lager Volumes very strong : 54% ahead of Prior Year and 3% ahead of plan. Market under supplied in Southern Region
• Decline in Sorghum Volumes slowed down. Only 2% below prior year. Good recovery in one litre Shake Shake volumes. This has better margins than the two litre scud
• Sparkling Beverages volumes very strong: 41% ahead of Prior year and ahead of plan,
• Operating Margins improved to 19.2%
• Profitability in line with plan
OCTOBER UPDATE
• Generating sufficient cash to fund dividends to share holders
• Beverage Volumes of 6m hectolitres
• Beverage market shares between 90 and 97% in the core businesses
• EBIT of $74m
• EBIT Margin (i.e., Operating Income to net sales) of 21%
We are on track to achieving all our key deliverables for F11
THANK YOU