full year 2015 results heineken n.v....guinness anchor berhad, malaysia 51% (indirectly) 7 october...
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Jean-François van Boxmeer
FULL YEAR 2015 RESULTS HEINEKEN N.V.
CHAIRMAN OF THE EXECUTIVE BOARD/CEO
AMSTERDAM, 10 FEBRUARY 2016
Strong performance delivering on strategy
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This presentation contains forward-looking statements with regard to the financial position and results of HEINEKEN’s activities. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.
Many of these risks and uncertainties relate to factors that are beyond HEINEKEN’s ability to control or estimate precisely, such as future market and economic conditions, the behaviour of other market participants, changes in consumer preferences, the ability to successfully integrate acquired businesses and achieve anticipated synergies, costs of raw materials, interest rate and foreign exchange fluctuations, change in tax rates, changes in law, changes in pension costs, the actions of government regulators and weather conditions. These and other risk factors are detailed in HEINEKEN’s publicly filed annual reports.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. HEINEKEN does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of these materials.
Market share estimates contained in this presentation are based on outside sources such as specialised research institutes in combination with management estimates.
Disclaimer
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2015 Key Highlights
Organic revenue +3.5% with rev/hl up +1.3%
Consolidated beer volume +2.3% organically with growth from Americas, Asia
Pacific and Europe more than offsetting weaker volume in Africa Middle East &
Eastern Europe
Heineken® volume +3.5% with growth in all regions
Innovation rate 9.2% contributing €1.9bn of revenue
Operating profit (beia) +6.9% organically
Operating profit margin expansion +23bps, in line with full year 2015 guidance
Diluted EPS (beia) up 17% at €3.57
Strong performance delivering on strategy
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Diversified Footprint Driving Balanced Growth
2015 FY Organic growth %
HEINEKEN NV
AFRICA MIDDLE EAST &
EASTERN EUROPE
AMERICAS ASIA PACIFIC EUROPE
Consolidated beer volume
2.3 -2.0 5.1 6.3 1.3
Revenue per hl 1.3 4.3 3.1 -2.1 -0.2
Revenue 3.5 2.7 8.5 4.1 1.4
Operating profit (beia) 6.9 -11 15 9.7 7.3
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Heineken®: Volume Growth Across All Regions
Heineken® volume in the premium segment +3.5%
Double digit growth in Brazil, CCU markets, the UK, South Africa and Mexico
Volume growth in Vietnam and continued improvement in the US
Successful UEFA Champions League, James Bond and Rugby World Cup activation during 2015
Exciting pipeline for 2016, including the “Moderate Drinkers Wanted” and Cities campaigns
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Innovations Contributed €1.9bn of Revenue
1 The innovation rate is calculated as revenues generated from innovation introduced in the past 40 quarters for a new category, 20 quarters for a new brand and 12 quarters for all other innovations, excluding packaging renovations divided by total revenue
Innovation Rate of 9.2%
LEADING INNOVATION
IN CIDER
LOW/NO ALCOHOL
IMPROVING DRAUGHT
Innovation rate1
4.1%5.3%
5.9%
7.7%
2011 2012 2013 2014 2015
€0.7bn
€1.9bn
2011 2015
28% CAGR
9.2%
Innovation revenueCRAFT/VARIETY
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Delivering Further Margin ExpansionIn line with full year 2015 guidance
16.2%
2014FY operating margin(beia) Dilutive impact Empaque Underlying improvement 2015FY operating margin(beia)
+23bps
• Delivered in a balanced way through effective revenue management, continued focus
on innovation, and investment in our brands, combined with cost effectiveness
-23bps+46bps 16.5%
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Laurence Debroux
FULL YEAR 2015 RESULTS HEINEKEN N.V.
MEMBER OF THE EXECUTIVE BOARD/CFO
AMSTERDAM, 10 FEBRUARY 2016
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Financial Overview
Key FinancialsMhl/€m unless otherwise stated 2015FY 2014FY Total Change (%) Organic Change (%)
Revenue 20,511 19,257 6.5 3.5
Operating profit (beia) 3,381 3,129 8.1 6.9
Operating profit (beia) margin 16.5% 16.2% 23bps
Net profit (beia) 2,048 1,758 16 16
Net profit 1,892 1,516 25
Diluted EPS (beia) in € 3.57 3.05 17
Free operating cash flow 1,692 1,574 7.5
Net Debt/EBITDA (beia) ratio 2.4x 2.5x
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Revenue: +3.5% Organic Growth
19,257 20,511
0.5%+2.5%
+2.2% 1.3%
FY14 Revenue Consolidation impact Currency translation Total volume Rev/hl FY15 Revenue
€m
Organic growth +3.5%
€m
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Operating Profit (beia) OG +6.9%
3,129 3,381
-2.1%
+3.3%
+6.9%
2014FY Operating profit (beia) Consolidation impact Currency translation Organic growth 2015FY Operating profit (beia)
€m
€m
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Diluted EPS (beia) €3.57, +17%
€3.05
-€0.10
+€0.12
+€0.50
2014FY Diluted EPS (beia) Consolidation impact Currency translation Organic growth 2015FY Diluted EPS (beia)
EPS +17%
€3.57
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Strong Free Operating Cash Flow
1 Defined as cumulative amounts of year-on-year changes in the Total Working Capital starting from 20102 Capital expenditure related to property, plant and equipment
€m unless otherwise stated 2015FY 2014FY vs. LY
Cash flow from operations (before change in working capital)
4,280 4,279 +1
Change in working capital 371 27 +344
Capital expenditure2 -1,638 -1,494 -144
Free operating cash flow 1,692 1,574 +118
Net debt/EBITDA 2.4x 2.5x4.7%
6.4%7.1%
7.8% 8.0%
0
500
1,000
1,500
2,000
2011 2012 2013 2014 2015
Capital expenditure2 as % of revenue (€ million)
Capex (€m) Capex (% of revenues)
0
100
200
300
400
500
600
700
800
2011 2012 2013 2014 2015
Cumulative working capital contribution to cash flow1
(€ million)
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Financial Guidance for FY 2016
Assuming spot rates as of 4 February 2016 the calculated negative currency
translational impact would be approximately €60 million at consolidated operating
profit (beia), and €35 million at net profit (beia)
Average interest rate of c.3.3% (2015: 3.3%)
Effective tax rate (beia) broadly in line with 2015 (27.8%)
Capital expenditure related to property, plant and equipment should be slightly above
€2 billion (2015: €1.6 billion)
To help modelling for the impact of consolidation of significant 2015 acquisitions*,
proforma full year 2015 net revenue would have been €840m and €110m at
operating profit (beia) level
* These include: Desnoes & Geddes (Jamaica), GAPL Pte Ltd (Singapore)/Guinness Anchor Berhad (Malaysia), Pivovarna Lasko d.d. (Slovenia), DHN Drinks (Pty) Ltd/Sedibeng Brewery (Pty) Ltd (South Africa)
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Summary
Strong performance in FY2015 demonstrating successful delivery of strategy
Continued focus on strategic priorities:
Driving innovation, excellence in execution and investing in our brands
More agile responding to consumer needs and more cost effective
Confident that 2016 will deliver top and bottom line growth, and margin
expansion in line with medium term margin guidance of around 40bps
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Appendix
FULL YEAR 2015 RESULTS HEINEKEN N.V.
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More challenging trading backdrop impacting results
Subdued consolidated beer volume
with tough macro-economic conditions
across most markets but with growth in
Ethiopia, in exports and Rwanda
Organic revenue/hl increased by
4.3%, driven by favourable
country, product and price mix
Measured capital investments in the
region, with production capacity being
added in Ethiopia and the formation of
a new joint venture in the Ivory Coast
Decline of -330bps on operating
profit (beia) margin mainly
reflecting a difficult environment
across the region
Revenue 3,263 3,189 2.3 2.7
Revenue/hl (in €) 76 74 2.8 4.3
Operating profit (beia) 579 671 -14 -11
Operating profit (beia) margin 17.7% 21.0% -330bps
Total volume 43.0 43.2 -0.4 -1.6
of which:Beer volume
35.9 36.1 -0.7 -2.0
Total Change (%)
Organic Change (%)
Mhl/€m 2015FY 2014FY
Africa Middle East & Eastern Europe
Affordability an important
theme, currency volatility
clearly also weighing on
results
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Organic consolidated beer volume
grew 5.1% with all key markets
contributing
Heineken® grew organically
by 6.4% led by Brazil, CCU
markets , the US and Mexico
Portfolio strategy, successful across the
region, the addition of Lagunitas and
Red Stripe brands strengthens the
consumer offer
Operating profit (beia) increased
organically by 15% driven by
Mexico and Brazil
Investing for future growth, with
new breweries under construction
in Brazil and Mexico
Revenue 5,159 4,631 11 8.5
Revenue/hl (in €) 90 85 5.7 3.1
Operating profit (beia) 904 780 16 15
Operating profit (beia) margin 17.5% 16.8% 70bps
Total volume 57.5 54.6 5.4 5.2
of which:Beer volume
56.0 53.2 5.3 5.1
Total Change (%)
Organic Change (%)
Mhl/€m 2015FY 2014FY
AmericasPortfolio strategy driving impressive revenue and profit growth
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Organic consolidated beer volume
growth of 6.3% with Vietnam,
Cambodia, Myanmar, Korea and Sri
Lanka positively contributing
Expanding footprint in high growth
territories, new brewery opened in
Myanmar, building one in East Timor and
increasing presence in Malaysia
Production capacity
expanded in China and
Cambodia
Operating profit (beia) up 9.7% organically,
driven by strong performances in Vietnam,
Mongolia, Singapore, Sri Lanka and Korea
Strong double digit growth of
Tiger brand driven by successful
commercial activation, brand
investments and innovation
Revenue 2,483 2,088 19 4.1
Revenue/hl (in €) 122 112 9.7 -2.1
Operating profit (beia) 702 550 28 9.7
Operating profit (beia) margin 28.3% 26.3% 200bps
Total volume 20.3 18.7 8.4 6.3
of which:Beer volume
19.8 18.3 8.1 6.3
Total Change (%)
Organic Change (%)
Mhl/€m 2015FY 2014FY
Asia PacificStrong performance even after more challenging 2H
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Organic consolidated beer volume growth of 1.3%,
with continued brand investment and innovations
driving strong growth of the premium brands led
by Heineken® and cider across key markets
Operating profit (beia) grew
7.3% led by Poland, Spain, UK
and France
Heineken® grew by
2.8% led by the UK up
double digit and strong
performance in Spain
Revenue per hectoliter was down
-0.2%, reflecting deflationary and off
trade pressures which limited pricing
Revenue 10,227 9.760 4.8 1.4
Revenue/hl (in €) 100 99 1.1 -0.2
Operating profit (beia) 1,196 1,109 7.8 7.3
Operating profit (beia) margin 11.7% 11.4% 30bps
Total volume 95.2 91.8 3.7 1.4
of which:Beer volume
76.6 73.6 4.0 1.3
Total Change (%)
Organic Change (%)
Mhl/€m 2015FY 2014FY
EuropePremiumisation driving good profit performance
3Q helped by better weather
which complemented the
success of the
premiumisation strategy
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Material Acquisitions in 2015
Current shareholding percentage
Completion date
Desnoes & Geddes, Jamaica95.8%* (73.3% in October
2015)7 October 2015
Guinness Anchor Berhad, Malaysia 51% (indirectly) 7 October 2015
Pivovarna Lasko d.d, Slovenia 97.5%* (53.4% in October
2015)15 October 2015
Lagunitas Brewing Company, US 50% 15 October 2015
DHN Drinks (Pty) Limited/Sedibeng Brewery (Pty)Limited, South Africa
75% 1 December 2015
Namibian Breweries Limited, Namibia 29.9% (indirectly) 1 December 2015
* After completion of the mandatory takeover bids in January 2016
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2013A 556 556 1.31
2014A 553 553 1.31
2015A 567 567 1.30
2016F 513 438 1.16
2017F 501 134 1.13
2013A 11
2014A 0
2015A 4
2016F* 37
2017F* 18
US Dollar Hedging
Position Impact versus previous year
Net inflowIn USD mln
Hedged Part**Year Hedged Rate*** Year Net Profit
* Impact on open positions calculated by comparing spot rate with previous year’s hedging rate ** Hedging as at 3rd Feb 2016*** Including the costs of hedging