erste group investor conference stegersbach, 11/10/2018 · stable shareholder structure free float...
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Erste Group Investor Conference
Stegersbach, 11/10/2018
Atlantic Grupa
Today
Atlantic Grupa is one of the
leading food companies in
the SEE region with the
renowned regional brands
that are, alongside the
product range of external
partners, supported by own
distribution system in the
region
2
17— production facilities
in 5 countries18— distribution
centres 5300— employees on
12 markets40— product presence
on over 40 markets
▪ Leading distributor of
multinational brands
▪ Founded in 1991
▪ FY17 sales: EUR 708m
▪ FY17 EBITDA*: EUR 69m
▪ MCap (30/09/2018) : EUR 463m
*Normalised 3
Management Board Ownership structure
Emil Tedeschi
Founder & President of the Management Board
Mladen Veber
Senior Vice President Business Operations
Zoran StankovićVice President Finance
Neven VrankovićVice President Corporate Affairs
ATLANTIC GRUPA AS THE BEST MANAGED COMPANY IN 2015
1st in CROATIA
2nd in the CEE region
1st in the FOOD & BEVERAGE sector in the CEE
4
1 6 12 17 27 33 36 42 61 81 90 102145
186223
267293 302
602630
657 674 682721
681708
0
100
200
300
400
500
600
700
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2010* 2011 2012 2013 2014 2015 2016 2017
Sales in EURm
2005-2017
❖2010: Acquisition of DROGA KOLINSKA
❖2007: IPO
❖2005: Acquisition of MULTIPOWER
2000-2004
❖ Regional expansion
❖ 2001: Acquisition of CEDEVITA
1990’s
❖ Distribution centres across
Croatia
❖ Various distribution
cooperations
DIS
TR
IBU
TIO
N
DIS
TR
IBU
TIO
N &
PR
OD
UC
TIO
N
VE
RT
ICA
L
INT
EG
RA
TIO
N
National company Regional company
GROWTH BASED ON INNOVATIONS AND M&AEuropean company
CEDEVITA
MULTIPOWER
DROGA KOLINSKA
2010*: Pro-forma consolidated with Droga Kolinska5
6
HISTORICAL DEVELOPMENTS OF KEY INDICATORS
4,7 4,8
4,2
3,53,2
3,03,2
2,3
0,0
1,0
2,0
3,0
4,0
5,0
6,0
Pro forma
cons 2010
2011 2012 2013 2014 2015 2016 2017
Net debt/EBITDA
11,3%
4,7%
7,6%
12,7% 12,4%13,1%
8,2%
12,9%
11,8%
9,4%10,4%
11,7%12,7% 12,5%
9,8%
10,9%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
Pro forma
cons 2010
2011 2012 2013 2014 2015 2016 2017
ROaE, ROCE
ROaE ROCE
11,7% 10,9% 11,3% 11,7% 11,7%
10,5%9,3% 9,7%
6,1%
7,4%8,1% 8,4% 8,6%
7,5%
6,0% 6,4%
2,8%
1,5%2,3%
3,9% 4,2% 4,5%
3,2%5,2%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
Pro forma
cons 2010
2011 2012 2013 2014 2015 2016 2017
Margin overview
EBITDA margin (normalised) EBIT margin (normalised)
Net profit margin (normalised)Normalised: excluding one off items.
602
630
657
674682
721
681
708
540
560
580
600
620
640
660
680
700
720
740
Pro forma
cons 2010
2011 2012 2013 2014 2015 2016 2017
Sales, EUR millions
❖ Stable shareholder structure
❖ Free float of 44.0%
Valuation 30 June 2018 31 December 2017 31 December 2016
Last price in reporting period 975.0 862.0 882.0
Market capitalization* (in HRK millions) 3,250.9 2,874.2 2,940.9
Average daily turnover (in HRK
thousands)491.9 356.2 717.9
EV (in HRK millions) 4,396.6 4,063.2 4,446.1
EV/EBITDA 7.4 7.9 9.4
EV/EBIT 10.3 11.9 14.4
EV/Sales 0.8 0.8 0.9
EPS (in HRK) 86.7 63.2 48.8
P/E 11.2 13.6 18.1
*Closing price multiplied by the total number of shares
PERFORMANCE ON CROATIAN CAPITAL MARKET
25,3%
-2,3%
7,8%
-3,7%-7,6%
18,1%
-3,5% -7,0%
17,1%
-40%
0%
40%
9.10.2018 2017 2016
ATGR Crobex Crobex10
7
88
TOP-NOTCH BRAND PORTFOLIO
COMPANIES BEHIND TOP RANKED BRANDS IN ADRIA REGION:
SLO
CRO
SRB
B&H
MAC
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
ADRIA
REGION
Source: Valicon brand strength survey 2016
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TOP-NOTCH BRAND PORTFOLIO
Source: Valicon brand strength survey 2016
Top 10 - Region
1Coca Cola
2Milka
3
4Vegeta
5
6
7Orbit
8
9Nivea
10Jana
Top 5 - Slovenia Top 5 - Croatia Top 5 - Serbia Top 5 - B&H Top 5 - Macedonia
Jana Plazma
Coca Cola Coca Cola Coca Cola Coca Cola Bitolski
Milka Coca Cola
Fructal Vegeta Moja kravica Colgate
Jamnica Milka Chipsy Stobi Flips
10
ATLANTIC GRUPA DISTRIBUTION
STRENGTH OF DISTRIBUTION
▪ The leading distributors of high-quality top FMCG brands
(both own and principal) in SEE
▪ Developed network with 18 distribution centers
▪ Direct access on over 60,000 sales points
▪ Over 1,000 delivery vehicles
▪ Developing distribution in Austria and Russia
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12
Results in line with expectations coupled with strong profitability growth
Development of own brands and openings of new specialised stores
Limitations in cooperation with key customer
Atlantic Grupa and Belgian Aminolabs entered into a strategic partnership
New distribution contracts and the start of Argeta production in the United States of America
Reorganisation of Atlantic Grupa’s distribution activities
Significant decrease of indebtness and cash flow growth
Risk management and consolidation of IT solutions
KEY BUSINESS DEVELOPMENTS IN 2017
13
❖ Factories in Bleckede and Nova
Gradiška sold, as well as the
associated private label production
for third parties (revenues in 2017
in the amount of EUR 25.9 million)
❖ Transaction realised on 31st
October 2017
❖ Strategic brands will remain in
full ownership of Atlantic Grupa
Cash received and receivables from sale of subsidiaries
(in EUR million)
Cash 20.0
Receivables 7.9
Total sales consideration 27.9
Gain from sale of subsidiaries 8.6
AMINOLABS PARTNERSHIP
14
Settlement of Agrokor Grupa creditors voted in favour
New distribution contracts (Mars and Red Bull)
SPA for Neva signed
Private label business impact
KEY BUSINESS DEVELOPMENTS IN 2018
2017A/2017E: 100.1
2017A/2016A: 103.9
2017A/2017E: 99.5
2017A/2016A: 109.1
2017A/2017E: 99.0
2017A/2016A: 111.0
15Normalised data.
Expectations changed in December of 2017
RESULTS IN LINE WITH EXPECTATIONS
0
200
400
600
800
Sales
708 707 681
2017A
2017E
2016A
0
EBITDA EBIT
69
46
69
46
63
41
2017A
2017E
2016A
All data in EUR millions.
❖ SBU Coffee: records a considerable increase in sales, due to good sales
results in all the key markets and all key categories coupled with high
value market share
❖ SBU Snacks: great sales results in the markets of Serbia, Bosnia and
Herzegovina and Montenegro, and a double-digit growth in the market of
Croatia.
❖ SBU Beverages: a significant increase in sales in almost all categories,
due to excellent sales results in Croatia, Slovenia, Russia and Bosnia and
Herzegovina.
❖ SBU Pharma and Personal Care: an excellent increase in sales primarily
due to the increase in sales of the pharmacy chain Farmacia and the
increase in sales of Multivita (Vitamin C in Russia), Neva i Dietpharm
products.
❖ SBU Savoury Spreads: a significant sales growth due to double-digit
revenue growth in the majority of markets.
❖ SBU Sports and Functional Food: an observable decrease in sales as a
consequence of the portfolio restructuring.
❖ Strategic Distribution Regions and Distribution units: excellent sales
results of own brands and pricipal brands, coupled with record-high sales
in Croatia, Slovenia and Macedonia.
❖ SDR Zone West: a decrease in sales mainly in the German market in the
SBU Sports and Functional Food.
Comparative period has been adjusted to reflect current period reporting.* Other segments include SDR HoReCa, SDU CIS&Baltic, BU Baby Food, BU Gourmet, DU Macedonia and business activities not allocated to business and distribution units (headquarters and support functions in Serbia, Slovenia and Macedonia) which are excluded from the reportable operating segments.** Line item “Reconciliation” relates to the sale of own brands which is included in the appropriate SBU and BU and in SDUs, SDRs and DUs through which the products were distributed.
(EUR million) FY 2017 FY 2016FY 2017/
FY 2016
SBU Coffee146.5 142.0 3.2%
SBU (Sweet and Salted) Snacks90.5 86.8 4.2%
SBU Beverages90.3 84.1 7.3%
SBU Pharma and Personal Care77.8 72.7 7.0%
SBU Savoury Spreads77.5 72.4 7.0%
SBU Sports and Functional Food51.3 59.9 (14.4%)
*From which private label production 25.9 23.6 9.7%
SDU Serbia151.3 146.8 3.0%
SDU Croatia138.1 129.2 6.9%
DU Slovenia102.4 100.6 1.8%
SDR Zone West55.9 67.1 (16.6%)
Other segments*115.0 101.7 13.1%
Reconciliation**(388.9) (382.5) 1.7%
Sales707.6 680.8 3.9%
16
SALES BY SBU&SDU IN 2017
* Macedonia, Montenegro, Kosovo ** Germany, United Kingdom, Italy, Switzerland, Austria, Sweden, Spain
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2017 2016
30%
23%17%
8%
7%
9%4%
2% Croatia 29.8%
Serbia 23.1%
Slovenia 16.7%
Bosnia and Herzegovina 7.8%
Other regional markets* 6.5%
Key European markets** 9.5%
Russia and CIS 4.3%
Other markets 2.3%
29%
23%17%
8%
7%
10%
3%
3% Croatia 28.8%
Serbia 23.2%
Slovenia 16.8%
Bosnia and Herzegovina 7.8%
Other regional markets* 6.7%
Key European markets** 10.1%
Russia and CIS 3.6%
Other markets 3.0%
21%
21%
13%
13%
11%
10%
3%
4% 3% 1%
Principal brands 21.6%
Coffee 20.7%
Beverages 12.8%
Sweet and salted snacks 12.8%
Savoury spreads 11.0%
Pharma & Personal care 10.6%
Sports and Functional Food - own brands 3.6%
Sports and Function Food - private label production 3.5%
Baby food 2.7%
Gourmet 0.7%
21%
21%
13%
12%
11%
10%
5%
4% 2%
1%
Principal brands 21.4%
Coffee 20.8%
Sweet and salted snacks 12.8%
Beverages 12.4%
Savoury spreads 10.6%
Pharma & Personal care 10.3%
Sports and Functional Food - own brands 5.3%
Sports and Function Food - private label production 3.5%
Baby food 2.3%
Gourmet 0.6%
SALES BY MARKETS AND SEGMENTS
• SBU Coffee: despite the increase in sales, thedecrease in profitability is a result of higher costs of rawcoffee, largely compensated by increasing retail prices.
• SBU Snacks: the increase in profitability is aconsequence of the increase in sales revenue coupledwith a good control of costs.
• SBU Beverages: the decrease in profitability primarilyarises from the absence of one-off items (return ofexpenses for the water concession in Slovenia in2016).
• SBU Pharma and Personal Care: the increase inprofitability is a result of the sales revenue growth,coupled with a good control of costs.
• SBU Savoury Spreads: a profitability growth wasrecorded following a significant revenue growth andlower marketing expenses, coupled with a strict controlof other operating expenses.
• SBU Sports and Functional Food: loss reduction as aresult of restructuring and a more favourable relativegross margin.
(EUR million) FY 2017 FY 2016FY 2017/
FY 2016
SBU Coffee 27.9 30.4 (8.1%)
SBU (Sweet and Salted) Snacks 16.1 15.5 3.9%
SBU Beverages 21.1 21.6 (2.4%)
SBU Pharma and Personal Care 7.4 6.3 16.7%
SBU Savoury Spreads 17.2 15.9 8.1%
SBU Sports and Functional Food (1.0) (2.7) 63.4%
SDU Serbia 3.7 2.7 39.5%
SDU Croatia 3.4 1.7 99.4%
DU Slovenia 6.1 5.8 6.1%
SDR Zone West (5.4) (6.9) 21.6%
Other segments* (18.9) (27.0) 29.9%
Group EBITDA 77.6 63.2 22.7%
18
• SDU Serbia: profitability growth as a consequence of sales growth, more favourable mix of customers and products (which led to a more favourable gross margin) and a favourable effect of the Serbian dinar exchange rate.
• SDU Croatia: profitability growth in line with volume and value growth in sales and a more favourable mix of customers, with optimum cost management.
• DU Slovenia: profitability growth as a result of an increase in sales and a better customer mix.
• SDR Zone West: despite the decrease in sales, primarily caused by the decrease in revenue in the Sports and Functional Food segment, the improved profitability is a result of lower costs of services, staff costs, marketing expenses and lower impairment of receivables and inventories.
• Lower cost of Other segments as a result of one off gain realised by sale of two factories from the sport and function food segment, as well as private label production of that segment.
* Other segments include SDR HoReCa, SDU CIS, BU Baby food, BU Gourmet, DU Macedonia and business activities which are not allocated on business and distributive areas (administrative headquarters and service support in Serbia, Slovenia
and Macedonia) and are excluded from reporting operative segments. Comparative period has been adjusted to reflect current period reporting.
OPERATING RESULTS OF SBU&SDU IN 2017
❖ Focus on further deleveraging (net debt decrease of EUR 42.3 million in 2017).
❖ Net debt vs normalised EBITDA ratio fell from 3.17 to 2.29 at the end of 2017, and to 2.15 at the end of H1 2018.
❖ Interest coverage ratio increased.
❖ The cash flow from operating activities amounted to EUR 46.4 million in 2017.
(in EUR millions) 30.6.2018. 2017 2016
Net debt 153.3 158.1 200.3
Total assets 681.8 683.5 719.4
Total Equity 312.1 300.0 268.9
Current ratio 1.5 1.5 1.4
Gearing ratio 32.9% 34.5% 42.7%
Net debt/Normalised EBITDA 2.15 2.29 3.17
H1 2018 2017 2016
Interest coverage ratio 10.8 8.8 6.1
Capital expenditure 6.9 17.2 18.7
Cash flow from operating
activities16.6 46.4 38.9
19
44%
18%
11%
4%
17%
6%
Capital and reserves 43.9%
Long term borrowings 18.2%
Short term borrowings 10.7%
Bond 3.9%
Trade and other payables 17.6%
Other liabilities 5.7%
FINANCIAL INDICATORS
20
GUIDANCE TRACK RECORD
❖ Atlantic Grupa listed on the Zagreb Stock
Exchange on November 19th 2007
❖Since 2008 Atlantic Grupa publishes guidance
for the following financial year and delivers it
0
1.000
2.000
3.000
4.000
5.000
6.000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Sales (HRKm)
93% 99%103%
99%98% 98%
102%
102%
100% 100%
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
EBITDA (HRKm)
100%101%98%
102%101%
96%
100%98%
100%99%
0
150
300
450
600
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
EBIT (HRKm)
104% 95%99%
104%101%
96%
100%
97% 99%99%
0
1.000
2.000
3.000
4.000
5.000
6.000
Sales EBITDA EBIT
4.930
559399
4.964
550385
Reported Guidance99%
102%104%
❖ Focus on (i) further strengthening the position of well-known regional brands, (ii) development of
distribution operations by strengthening of the existing and acquisition of new principals, (iii) increasing of
the regional HoReCa portfolio, and (iv) continued internationalisation of operations.
❖ Continuation of listing and positioning of own brands into retail channel in Germany in cooperation with
distribution partners with the aim to increase the efficiency of overall operations in this market.
❖ The management of Atlantic Grupa in 2018 expects lower average prices of raw coffee in the global
commodity markets and an favourable effect of the EURUSD exchange rate, which will have a positive
influence on the profitability of the Strategic business unit Coffee, as well as Atlantic Grupa in whole.
• If the effect of revenue realised on the basis of service production (private label) in the sports and functional food segment that in 2017 amounted to approximately EUR 26 million is excluded, the expected revenue growth in 2018 compared to 2017 will be 5.1%. If we exclude operating profit realised on the basis of this service production, the increase in EBITDA will be 9.6% while the increase in EBIT will be 13.3%.
• In 2018, we expect capital expenditure in the amount of around EUR 21 million.
• The expected effective tax rate in 2018 should be at the level of the previous year.
Strategic
management
guidance
(in EUR millions) 2018 Guidance 2017 2018/2017
Sales 707 700 1.0%
EBITDA 73 69 6.3%
EBIT 50 46 9.8%
Interest expense 6 8 (23.1%)
21
STRATEGIC GUIDANCE FOR 2018
22
BUSINESS UNITS
23
SBU COFFEE 20.7 % — share in sales
EUR 147m— sales in 2017
24
SBU SNACKS 12.8 % — share in sales
EUR 91m— sales in 2017
25
SBU BEVERAGES 12.8 % — share in sales
EUR 91m — sales in 2017
26
SBU SAVOURY SPREADS 11.0 % — share in sales
EUR 78m— sales in 2017
27
SBU PHARMA AND PERSONAL CARE10.6 % — share in sales
EUR 78m— sales in 2017
28
SBU SPORTS AND FUNCTION FOOD7.2 %
— share in sales
EUR 52m— sales in 2017
29
2.7 % — share in sales
EUR 19m— sales in 2017
BU BABY FOOD
30
BU GOURMET 0.7 % — share in sales
EUR 5m— sales in 2017
Atlantic Grupa d.d.
Miramarska 23
10000 Zagreb, HR
T +385 1 2413 900
http://www.atlantic.hr/en/
31