united breweries limited presentation november 2007
TRANSCRIPT
United Breweries Limited
Presentation November 2007
India and the Beer Industry
Indian Economy
• The current year growth rate is 9%
• The growth is largely propelled by local consumption hence lesser prone to global changes.
• Inflation currently at (5.7- 7.9)% (CPI) giving impetus to growth – Source RBI Oct 13, 2007
• Substantial increase in the disposable income in the age group of 20 to 30 years
Increase in disposal Income
0% 50% 100%
2009-10
2001-02
1989-90
Low (< Rs.45 K)
Middle (Rs. 45K -Rs.90K)
High (> Rs. 90K)
Source: Motilal Oswal Securities
Indian Demographics – favorable to growth in beer consumption
• Current population 1.1 billion• Over 50% of the population is below the age of 20 years• The demographics to remain almost unchanged till the year 2020•Core target market is 18-30 year olds• As initiation to alcohol consumption is through low alcohol beverages like beer – excellent opportunity for growth in beer consumption over the next decade and half.
94.2
70.8
636
485
447
455
0% 20% 40% 60% 80% 100%
2011
2001
> 60 years
20-59
0-19
Population demographics
Figures millionSource: Motilal Oswal Securities
Beer Industry in India
• Policies & Regulations are driven by State Government
• Highly regulated with restriction in movement between states
• 65% of the Indian market is state controlled – Distribution by Govt. Corporations, implications upon pricing
• Advertising strictly prohibited, advantage for existing players, major barrier to entry
Beer Industry in India contd.
• Government corporations are now approachable and not averse to make changes
• There have been recent recommendations by some governing bodies to de link beer from spirit and have a common national duty structure much lower than the current duty levels
Beer Industry in India contd
AFFORDABILITY• Duty not set
according to alcohol content
• Highest duty in the world
• Expensive alcoholic beverage
AVAILABILITY• 55,000 licensed
outlets across the country
• 1 per 20,000 people• In UK 1 per 350
people
Beer is not the alcoholic beverage of the common man
Alcohol Consumption
India EmergingMarkets
21.5% 87%Beer
Spirits/Liquor
Wine 5%
8%
<0.5%
78%
Per Capita Beer Consumption
0.912
22 24
59
82
100
125
0
20
40
60
80
100
120
140
India
Indo
nesia
China
World
Avg
Russia
USA UK
Germ
any
Country
Lit
ers
Key performance highlights H1 2007-08
• 13.8% volume growth in UBL while the combined business grew at 14.3% as against an industry growth of 12.6%
• Kingfisher growth - premium 5.4%, strong 23.9%
• EBITDA at the half year end 112 Cr. as against 87 Cr., a growth of 29%
• Combined EBITDA at the half year end 143 Cr. as against Cr.110, a growth of 30%
Operational performance
Volume Growth – H1
+ 12.6%
+ 14.3% + 13.8%+ 16.6%
Industry CombinedBusiness
UBLOnly
MABLOnly
Change in Consumption pattern
0
10
20
30
40
50
60
701995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Mild Beer %
Strong Beer %
• Currently all international brands known in India are mild beers & most of the new launches have been in this category, which has been declining
Kingfisher PerformanceKingfisher premium - % growth
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2005-06 2006-07 2007-08 Est.
Industry-Mild
KF premium
Kingfisher Strong - % growth
0.0%5.0%
10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%
2005-06 2006-07 2007-08 Est.
Industry-Strong
KF Strong
UBL V’s SABM Market Share
33%
47%
UBL SABM
March 07
Financial Performance
Margin on sales in the published financials not comparable as Sept. 06 does not include KBDL a 100% subsidiary
Results September 07United Breweries Limited 30.9.2007 30.9.2006
In rupees crore Incl. of KBD
Net Sales/Income from operations 579.66 415.12 464.59 Other Income 13.79 5.37 Total Income 593.45 420.49 41%
ExpenditureCost of production 301.88 193.70 Advertisement & Sales Promotion 144.72 114.31 Other operating Costs 34.61 25.51
PBIDT 112.23 86.97 29% 88.25 Margin on sales 19.36% 20.95% 18.99%
PBIDT 112.23 86.97
Finance charges 19.02 12.00
Depreciation 26.02 10.15
Profit Before Non recurring items &Taxation 67.19 64.82 4%
Non Recurring items
Taxation (25.01) (24.09) Net Profit 42.18 40.73 4%
COMBINED BUSINESSPBIDT 143.31 109.75 31%
Finance charges 31.50 27.67Depreciation 38.05 20.29 Profit Before Non recurring items &Taxation 73.76 61.79 19%
Year ended
Audited
Performance analysis
• An increase in the operating margins despite cost push
• Despite a 29% growth in operating margins PBT growth of only 4% on account of interest & depreciation – Rights issue approved by the Board expected in the first half of the next financial year
• Healthy growth in operating margins of 31% in the combined business
Summary Balance Sheet
UNITED BREWERIES LIMITED
BALANCE SHEET As at As at COMBINED BUSINESSAmounts in rupees million 30.9.07 31.3.07 30.9.07 31.3.07SourcesShare Holders Funds 5,998 5,583 4,012 3,498 Loan Funds 4,075 4,762 7,185 7,766 Total Sources 10,073 10,344 11,197 11,263 ApplicationFixed Assets 6,172 5,262 7,462 6,561 Investments 591 591 1 1 Net Current Assets 3,310 4,491 3,733 4,702 Total Application 10,073 10,344 11,197 11,263
Ratios
UNITED BREWERIES LIMITED As at As at COMBINED BUSINESSRupees Million 30.9.07 31.3.07 30.9.07 31.3.07
Debt 4,075 4,762 7,185 7,766
Net Worth 5,998 5,583 4,012 3,498
GEARING 0.68 0.85 1.79 2.22
PBIDT 112 162 143 186
Interest 19 28 31 54
INTEREST COVER 5.90 5.77 4.55 3.47