BREWING A SUCCESS IN INDIA Disclaimer This investor presentation - - PowerPoint PPT Presentation

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BREWING A SUCCESS IN INDIA Disclaimer This investor presentation - - PowerPoint PPT Presentation

CLSA Investor Presentation BREWING A SUCCESS IN INDIA Disclaimer This investor presentation has been prepared by United Breweries Limited (UBL) and does not constitute a prospectus or placement memorandum or an offer to acquire any


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SLIDE 1

BREWING A SUCCESS IN INDIA

CLSA Investor Presentation

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SLIDE 2

Disclaimer

This investor presentation has been prepared by United Breweries Limited (“UBL”) and does not constitute a prospectus or placement memorandum or an offer to acquire any securities. This presentation or any other documentation or information (or any part thereof) delivered or supplied should not be deemed to constitute an offer. No representation or warranty, express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions contained herein. The information contained in this presentation is only current as of its date. Certain statements made in this presentation may not be based on historical information or facts and may be “forward looking statements”, including those relating to the general business plans and strategy of UBL, its future financial condition and growth prospects, future developments in its industry and its competitive and regulatory environment, and statements which contain words or phrases such as „will‟, „expected to‟, „strong growth prospects‟, etc., or similar expressions or variations of such

  • expressions. These forward-looking statements involve a number of risks, uncertainties and other

factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by the forward-looking statements. UBL may alter, modify or otherwise change in any manner the content of this presentation, without

  • bligation to notify any person of such revision or changes.

No person is authorized to give any information or to make any representation not contained in and not consistent with this presentation and, if given or made, such information or representation must not be relied upon as having been authorized by or on behalf of UBL.

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SLIDE 3

INDIA AND THE BEER OPPORTUNITY

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SLIDE 4

Demographics set for beer growth

  • Current population 1.2 billion
  • Core target market is 18-30 year olds
  • Young population, with net increase in working

age population of 270 mln till 2030

  • The emerging young population hold more

liberal views on alcohol

  • As initiation to alcohol consumption is through

low alcohol beverages like beer

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SLIDE 5

But beer consumption very low

22% 87% Beer Spirits Wine 5% 8% <0.5% 78% Per Capita Beer Consumption at comparable GDP India Emerging Markets Share of alcohol consumption

1.5 liter 20 liter

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SLIDE 6

Two key reasons

AFFORDABILITY

  • Highest duty in the

world

  • Duty not set

according to alcohol content

  • Expensive alcoholic

beverage AVAILABILITY

  • 65,000 licensed
  • utlets across the

country

  • 1 per 18,000 people
  • In China: 1 per 300

people Beer is not the alcoholic beverage

  • f the common man
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SLIDE 7

A highly regulated market

  • Excessive State regulation and intervention
  • Route to market
  • Economics, need to have a brewery in each state
  • Pricing
  • Driver of growth is Strong beer
  • Specific to Indian market
  • Ban on advertising alcohol
  • Difficult to build new brands
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SLIDE 8

Positive signs on the horizon

  • Government corporations are now approachable

and not averse to make changes

  • There have been recent signs by some

governing bodies to de-link beer from spirits

  • Maharashtra & Goa have gone ahead and

issued beer only licences.

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SLIDE 9

Indian Beer market is at the start

  • f the growth curve

2 37 86 98 20 40 60 80 100 120 India China Brazil Russia

Kenya Nigeria Vietnam India Philippines China Thailand Colombia Brazil Mexico Argentina Chile Russia

20 40 60 80 100 120 $0 $5,000 $10,000 $15,000 $20,000

Lowest consumption of BRIC countries

Per Capita Beer Consumption

GDP growth will drive consumption

Per Capita Consumption vs. GDP Growth

PCC in Liters PCC in Liters GDP per Capita (in USD, PPP)

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SLIDE 10

OUR POSITION IN THE MARKET

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SLIDE 11

UBL’s leadership is undisputed

  • Strong market position will continue to drive

economies of scale and superior returns

UBL 51% Nearest Competitor 25%

All-India Market Share

Kingfisher 37% Nearest Competitor 13%

Market share by Brand

2x 3x

RMS: RMS:

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SLIDE 12

UBL’s Capability

  • Iconic brand – KINGFISHER
  • Balanced portfolio of supporting brands
  • Manufacturing network across all major

states

  • Best Route to Market
  • Established distributor relationships
  • Leadership in cold chain management, and

point of sale visibility

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SLIDE 13

UBL is reaping the benefits: 100 million landmark reach in FY10

  • 20

40 60 80 100 120

00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 (E)

  • 10

20 30 40 50 60

00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 (E)

4x 2x 12x 3x

Doubled in size every 4-5 years

Total Volumes in 7.8l cases

Driven by Kingfisher Strong

Kingfisher Strong Volumes in 7.8l cases

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UBL significantly outperformed the market in FY10

  • Share gains across almost all

markets

  • UBL achieved double the

growth of the market in the year 2009-10, even when already holding 50% market share

  • Both Kingfisher Premium and

Kingfisher Strong are the leaders in their segment

  • Launches of strong variants in

the economy segment (like London Pilsner Strong) have been hugely successful

Gain Loss Unchanged

All India Market share of over 50%

Change in market share FY10

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SLIDE 15

RESULTS H1 FY2011

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Performance highlights H1

  • 28% volume growth in UBL as against an industry

growth of 24%

  • Mild beer segment back on the increase
  • Kingfisher growth - premium 22%, strong 40%, both

gaining share

  • Star performing markets were Maharashtra, Andhra

Pradesh, Karnataka, Uttar Pradesh and Orissa

  • UBL achieved sales of over 10 million cases for five

consecutive months

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Financial highlights H1

  • Revenue growth higher than volume growth through selective price

increases and higher contribution SKUs.

  • Significant investment in patented bottle pool
  • Fixed cost containment and working capital optimisation delivered

enhanced margins

  • Net profit already exceeds last full year‟s profit

H1 2011 H1 2010 Change Revenue 15,993 12,156 32% EBITDA 2,446 1,436 70% Operating Margin 15.3% 11.8% 29% Net Profit 981 472 108%

In Rs. million

Strong top line growth, and realising operating leverage

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SLIDE 18

Financial highlights H1

  • Working Capital reduction program started few months ago and already

yielded 30% days reduction. In light of 32% revenue growth, up to Rs 1.6 bln of funds tied up in WC has been avoided.

  • Strong focus on cash generation has significantly brought down debt.

H1 2011 H1 2010 Change Net Working Capital 3,356 3,871

  • 13%

Capex 533 706

  • 25%

Net Debt 8,974 10,272

  • 13%

Net Debt/EBITDA 2.6x 3.9x

  • 34%

In Rs. Million

Cash flow profile and financial strength have improved significantly

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Unifying our operations

  • Simple Corporate Structure

collapsing multiple legal entities to get unified ownership in one single entity

  • Optimised cash flows

reduction in overall effective tax rate

  • Realize Synergies

Operational efficiencies in running combined operations

  • Enhanced financial strength

with 15m new shares issue

  • Consolidation of all installed

capacity within UBL

Note: Ownership pattern depicted represents voting equity ownership

UBL

UB Group Heineken Public

37.5% 37.5% 25.0% Promoter Group MAPL

ABDL

100% 10% 40% 50% UMBL Empee MBIL 100% 100% 89% MAPL Group

Merging all subsidaries into UBL

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In Summary…

  • Indian Beer market growth opportunity

unparalleled in the world

  • UBL is excellently positioned to reap the

benefits

  • Enhanced cash flow profile should deliver

strong profit growth

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QUESTIONS PLEASE…