C&C Group plc p p 2010/11 First Half Results October 2010 - - PowerPoint PPT Presentation
C&C Group plc p p 2010/11 First Half Results October 2010 - - PowerPoint PPT Presentation
C&C Group plc p p 2010/11 First Half Results October 2010 Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any shares or other securities of C&C Group plc
Disclaimer
This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any shares or other securities of C&C Group plc (the "Company"). The presentation contains forward-looking statements, including statements about the Company's intentions, beliefs and expectations. These statements are based on the Company's current plans, estimates and projections, as well as the Company's expectations of external conditions and events. Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made The Company undertakes no duty to and will not necessarily update any such statements in light of new information or are made. The Company undertakes no duty to and will not necessarily update any such statements in light of new information or future events, except to the extent required by any applicable law or regulation. Recipients of this presentation are therefore cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward- looking statements. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. Any statement in this presentation which infers that the transactions may be earnings accretive does not constitute a profit forecast and should not be interpreted to mean that the Company’s earnings or net assets in the first full financial year following the b d ld l h b h h f h l d f l transactions, nor in any subsequent period, would necessarily match or be greater than those for the relevant preceding financial year. Your attention is drawn to the risk factors set out in the Appendix to this presentation. They are not set out in any particular order of
- priority. The risks described in this document, however, are not exhaustive and consequently do not necessarily comprise all those
associated with the Company and/or the recently acquired businesses There may be other risks which may have an adverse effect on associated with the Company and/or the recently acquired businesses. There may be other risks which may have an adverse effect on the business, financial condition, results or future prospects of the Company.
C&C Group plc Slide 2
2010/11 H1 | Presentation Agenda
1 Performance Overview
- 1. Performance Overview
- 2. Financial Review & Outlook
- 3. Segmental Review
- 4. Q&A
C&C Group plc Slide 3
2010/11 Objectives
Corporate & Financial Objectives | 2010/11 Continue to build on momentum of Magners in GB Protect Bulmers earnings position in Ireland Protect Bulmers earnings position in Ireland Integrate and deliver synergies from acquired businesses Lay foundation for international development of cider Capital structure and free cash flow to deliver strategic objectives p g j
C&C Group plc Slide 4
2010/11 First Half | Performance Overview
Constant Currency
- Constant Currency
Magners cider volumes in growth at 1.6%
Magners GB returned to growth at 0.7%
Volumes khl H1 2011 H1 2010 Change %
Magners GB returned to growth at 0.7% Magners export volumes +34.4%
Net revenue increased 73.0% to €305.5m and operating profit has increased by 29.4% to €63.4m
Bulmers 296 307 (3.4%) Magners 567 558 +1.6% Original Cider 880 883 (0.3%)
Original cider business net revenue declined 5.3%
Operating profit declined by 1.8% Operating margin improved 1.2 points to 33.2%
Original Cider 880 883 (0.3%) Gaymers 958
- Tennent’s Lager
820
- Operating margin improved 1.2 points to 33.2%
Operating profit contribution from acquired businesses
- f €15.6m in line with expectations
Operating Profit €m H1 2011 H1 2010 Change % Original cider 47.9 48.8 (1.8%)
Free cash flow of €93.8m representing 119% of EBITDA Adjusted diluted EPS increased 10.8% to 15.4 cent
Distribution (0.1) 0.2
- Tennent’s
12.6
- Gaymers
3.0
- djusted d uted
S c eased 0.8% to 5. ce t Interim dividend increased 10% to 3.3 cent per share
y Total 63.4 49.0 29.4% Discontinued 4.5 4.9
- C&C Group plc
Slide 5
Total 67.9 53.9
2010/11 First Half | Business Drivers
Corporate Disposal of Spirits & Liqueurs C l ti f b i & IT t i t ti Completion of business & IT systems integration On track to deliver €8m of synergies in 2010/11 Ireland New pricing on pint bottle and draught L h f B l B d d ti i Launch of Bulmers Berry and new advertising New beer portfolio Great Britain New Magners advertising G i i & f i f i l l f Gaymers integration & formation of single sales force Cider duty changes in period Scotland New Tennent’s advertising & Football Sponsorship Integration successfully completed Launch of Magners Golden Draught Northern Ireland Number 2 position in lager Integration successfully completed Rest of World Accelerated cider volume growth
C&C Group plc Slide 6
2010/11 First Half | Business Overview
Volume Operating profit
2%
profit
10% 7% 14% 7% 16% 2% 34% 42% 3% 3% 14% 2% 29% 29% 3%
Bulmers ROI Magners GB Magners NI Magners ROW Tennent's Gaymers & other ciders
Bulmers and Magners represent 30% of C&C volumes and 77% of operating profit
Third party brands
C&C Group plc Slide 7
Note: Operating profit after allocation of Group overheads
2009/10 Performance Overview
Republic of Ireland | Cider
- Republic of Ireland | Cider
LAD market growth driven by off-trade lager and promotional activity around the World Cup beer
C&C Group plc Slide 8
Source: ACNielsen Data to Aug 2010
World Cup beer
2009/10 Performance Overview
Great Britain | Cider
- Great Britain | Cider
Magners’ recovery to MAT growth of 1% at August 2010 – continue to target growth in line with the market by the year-end
C&C Group plc Slide 9
Source: ACNielsen & CGA Data to 7/8/2010
growth in line with the market by the year end
2009/10 Performance Overview
Scotland | Lager
- Scotland | Lager
Tennent’s challenged by low value position for retailer
C&C Group plc Slide 10
Source: ACNielsen & CGA Data to 7/8/2010
2009/10 Performance Overview
Scotland | On Trade Lager
- Scotland | On-Trade Lager
Tennent’s continues to outperform
C&C Group plc Slide 11
Source: ACNielsen & CGA Data to 7/8/2010
Performance Review
Core markets of Ireland and the UK remain unpredictable and challenging UK cider category remains in growth and Magners has returned to modest volume growth Successful integration of Tennent’s and Gaymers and a good first half performance for both businesses Cider ROW starting to show accelerated growth Strengthened position in the long alcohol drinks sector positions C&C to continue Strengthened position in the long alcohol drinks sector positions C&C to continue to drive Magners recovery C&C confident of delivering market consensus for operating profit in the range of g p g p g €102-€106m for the financial year 2010/11
C&C Group plc Slide 12
2010/11 H1 Financial Review
C&C Group plc Slide 13
2010/11 H1 | Financial Summary
Constant Currency
- Constant Currency
Gross revenue increased by 106.7% to €451.6m
N t i d b 73 0% t €305 5 Net revenue increased by 73.0% to €305.5m Original cider net revenue (excluding acquisitions) declined by 5.3% to €144.3m
Operating profit increased by 29.4% to €63.4m (excluding €4.5m from disposal of Spirits)
Original cider operating profit (excluding acquisitions) declined by 1.8% to €47.9m Acquisitions contributed €15.6m: Tennent’s €12.6m and Gaymers €3m Discontinued (Spirits) businesses generated €4.5 million in the period
Operating margin (as % of net revenue) declined by 6.9% percentage points to 20.8%
Original cider operating margin improved by 1.2 points to 33.2% Tennent’s & Gaymers operating margin of 17 4% and 6 0% respectively in the period (before allocation of Tennent s & Gaymers operating margin of 17.4% and 6.0% respectively in the period (before allocation of Group overheads)
Exceptional free cash flow in the period of €93.8m representing 119% of EBITDA
One-off timing benefit of €31m ABInBev cash flow
Free cash flow and disposal proceeds eliminated net debt – net cash of €20.8m at 31 August 2010
C&C Group plc Slide 14
H1 2010/11 Income Statement
After exceptional items
- After exceptional items
H1 2010/11 H1 2009/10 Change Change
C
€m €m
- Const. currency
Net revenue 305.5 181.4 +68.4% +73.0% Operating costs (246.0) (126.7) +94.2% +96.2% p g ( ) ( ) Operating profit 59.5 54.7 +8.8% +16.2% Net finance charges (4.8) (2.6) +84.6%
- Profit before tax
54.7 52.1 +5.0%
- Tax
(7.7) (5.4) +42.6%
- Effective tax rate
14.1% 10.4%
Discontinued Operations 229.1 5.2 Profit for the period 276 1 51 9 +432 0% Profit for the period 276.1 51.9 +432.0%
- C&C Group plc
Slide 15
2010/11 H1 Revenue Performance
Net revenue
- Net revenue
+82.0% €305.5m
€m
82.0% €305.5m €181.4m (0.3%) (4.3%) (2.9%) €156.7m (6.1%)
Price/mix and currency are the main drivers for a decline in original cider sales
C&C Group plc Slide 16
2010/11 H1 Operating Profit Performance
Performance Drivers
- Performance Drivers
€m
+29.7% €63.4m €52.5m (0.8%) (6.7%) +14.0% +29.7% €63.4m €47.8m (15.4%)
Operating margin in the underlying business down to €47.8m largely due to currency and price/mix
C&C Group plc Slide 17
currency and price/mix
Acquisitions Update
Integration of the ABInBev business in Northern
€m Synergy & Cost Reduction Benefits
g Ireland and launch of the new Tennent’s NI business unit I t ti f G l d k ti t
€m €10m
Integration of Gaymers sales and marketing teams and launch of new Magners business unit in GB Migration of Tennent’s Scotland, Magners GB and
€8m €10m
g , g Gaymers onto new IT systems platforms Integration achieved with minimal customer disruption disruption
Synergy target revised upward to €8m for 2010/11 and on track to deliver a total
- f €18m by 2011/12
C&C Group plc Slide 18
- f €18m by 2011/12
2010/11 H1 Cashflow
Strong Free Cashflow | Net Debt Eliminated
- Strong Free Cashflow | Net Debt Eliminated
€53.4m +€14.5m +€26.1m (€0.5m) +€7.9m €93.8m
€m
(€7.6m)
€176.9 net debt €20.8m net cash net debt net cash
The Group is in a net cash position at the half-year. One-off timing benefit to working capital of €31m ABInBev cash flow in the period
C&C Group plc Slide 19
working capital of €31m ABInBev cash flow in the period
EPS and Dividend
Adjusted diluted EPS – continuing operations (€c)
4.8c 13.5c 13.9c (0.4c) (0.4c) (1.4c) 15.4c (1.1c)
2010/11 H1 Dividend Interim dividend of 3.3c 10% increase on prior year
EPS in the underlying C&C business was in line with last year. Acquisitions compensated for the negative impact of forex and increased tax and interest.
C&C Group plc Slide 20
compensated for the negative impact of forex and increased tax and interest.
Managing Business Risk
Pension Counter-party risk Long-term supply arrangements Hedging
C&C Group plc Slide 21
Summary & Outlook
The Group’s brands are in good health Development of Magners internationally is beginning to provide some protection against the current market challenges of Ireland C&C confident of delivering market consensus for operating profit in the range of €102-€106m for the 2010/11 financial year Strong underlying free cash flow and balance sheet will ensure the Group can continue to invest for growth, despite the difficult trading environment in our core markets markets
C&C Group plc Slide 22
2010/11 H1 Segmental Overview
C&C Group plc Slide 23
2010/11 H1 Business Segments
Cider GB | Constant Currency
Cider GB
Magners H1 ‘11 H1 ’10 Change
Const Curr.
Magners Net Revenue
- Cider GB | Constant Currency
Net revenue
€m
67.2 71.3 (5.8%) Operating Profit
€m
18.3 16.2 +13.0% Acquisitions Cider ROI Operating Margin
%
27.2% 22.7% +4.5pts Volumes
khl
454 451 +0.7% Acquisitions Cider ROW
Cider GB H1 ’11
Total
H1 ‘11
Magners
H1 ’11
Gaymers
Volume Breakdown | On & Off-Trade
g y Net revenue
€m
119.0 67.2 51.8 Operating Profit
€m
21.3 18.3 3.0
Magners 60% 40% Gaymers
13% Operating Margin
%
17.9% 27.2% 5.8% Volumes
khl
1,413 454 959
60% 87%
C&C Group plc Slide 24
2010/11 H1 Business Segments
Cider Republic of Ireland | Constant Currency
- Cider Republic of Ireland | Constant Currency
Cider ROI H1 ‘11 H1 ’10 Change
Const Curr.
Net Revenue
Cider GB Net revenue
€m
58.1 63.2 (8.1%) Operating Profit
€m
27.8 30.4 (8.6%) Acquisitions Cider ROI Operating Margin
%
47.8% 48.1%
- 0.3pts
Volumes
- Bulmers
khl
296 307 (3.4%) Acquisitions Cider ROW Volumes
- Total cider
khl
313 325 (3.7%)
Weak consumer environment and price Volume Breakdown | On & Off-Trade Weak consumer environment and price deflation Continued migration of volumes from on- to
- ff-trade
ROI Cider Business 38%
Increased competition around World Cup
38% 62%
C&C Group plc Slide 25
2010/11 H1 Business Segments
Acquisitions
- Acquisitions
Acquisitions H1 ’11
Total Acquisitions
H1 ’11
Gaymers
H1 ’11
Total Tennents
H1 ’11
Distribution
H1 ’11
Tennents Brand
Cider GB Net revenue
€m
148.7 51.8 96.4 36.8 59.6 Operating Profit
€
15 6 3 0 12 6 2 2 10 4 Acquisitions Cider ROI Operating Profit
€m
15.6 3.0 12.6 2.2 10.4 Operating Margin
%
10.5% 5.8% 13.1% 6.0% 17.4% Acquisitions Cider ROW Volumes
khl
1,979 958 1,021 201 820
Integration
- f
Tennent’s and Gaymers is now Volume Breakdown | On & Off-Trade complete Both acquisitions delivered solid results in the period Margins for the Tennent’s brand were encouraging at
Tennent’s 40%
13%
60% 40%
13%
Gay mers
17.4% Brand continues to grow share in both on trade channels of Scotland and Northern Ireland
60% 87% 60% 87%
C&C Group plc Slide 26
Note: Operating profit before allocation of Group overheads
2010/11 H1 Business Segments
Cider Rest of World | Constant Currency
- Cider Rest of World | Constant Currency
Net Revenue
Cider ROW H1 ‘11 H1 ’10 Change
Const Curr.
Cider GB Net revenue
€m
11.8 8.8 +34.0% Operating Profit
€m
1.9 0.4 +375.0% Acquisitions Cider ROI Operating Margin
%
16.1% 4.5% NM Acquisitions Cider ROW
Growth of Magners exports accelerated in the
Volumes
khl
67.9 50.5 +34.4%
g p first six months of 2010/11. North America and Australia were the biggest contributors to growth. Exports represented 12% of the total Magners brand volume in the period.
C&C Group plc Slide 27
Summary
Building a robust basis for growth in the largest cider market in the world Building a robust basis for growth in the largest cider market in the world Debt free and high cash generation provide flexibility Positioned well to grow business in tough conditions The start of international expansion p
C&C Group plc Slide 28
Appendix
C&C Group plc | 2010/11 Calendar Scotland Investor Day 10 Nov-10 Q3 IMS 14 Jan-11 2010/11 FY R lt M 2010 2010/11 FY Results May 2010
C&C Group plc Slide 29
C&C Business Overview
Tennent’s ABI distribution rights C&C Other Assets Gaymer Cider Co.
- Wellpark brewery
- Advances to customers
- Tennent’s wholesale
- 3 year contract brewing
Non-exclusive on-trade
Scotland
- Pub loan book
- 3 year contract brewing
agreement Non exclusive on trade distribution rights
h
Non-transnational
- n- and off-trade
Packaged
Northern Ireland Republic of Ireland
- Clonmel Facility
On- and non-transnational
- ff-trade distribution rights
England
Slide 30
England (& ROW)
- Shepton Mallet Facility
- Distribution Facility
Risk Factors
Integration risk Cider duty risk Exchange rate risk Deteriorating business conditions in core markets
C&C Group plc Slide 31
Segmental Analysis | Continuing Businesses
Constant Currency
- Constant Currency
Net Revenue €m H1 2010/11 H1 2009/10 Change
Cider ROI 58.1 63.2 (8%) Cider NI 7.2 9.1 (21%) Cider NI 7.2 9.1 (21%) Cider GB 119.0 71.3 +67% Cider RoW 11.8 8.8 +34% Tennent's GB 46.1
- Tennent's IoI
13.5
- Third Party
49.8 24.2 +106% y Total continuing 305.5 176.6 +73%
Operating Profit €m H1 2010/11 H1 2009/10 Change
Cider ROI 27.8 30.4 (9%) Cider NI 2.1 1.8 +17% Cider GB 21.3 16.2 +31% Cider RoW 1.9 0.4 +375% Tennent's GB 6.4
- Tennent's IoI
2.7
- Third Party
1.2 0.2 +500% Total continuing 63.4 49.0 +29%
C&C Group plc Slide 32
Note: Operating profit after allocation of Group overheads
2010/11 H1 Cashflow
H1 2010/11 H1 2009/10 Change €m €m €m €m Operating profit 67.9 57.4 +18% Depreciation 10.9 6.9 +58% EBITDA 78.8 64.3 +23% Net finance charges / taxation (7.5) (7.0) +7% Change in working capital 38.8 12.7 +206% Exceptional items (4.5) (12.4) (64%) Operating cash flow 105.6 57.6 +83% % of EBITDA 134% 90% Capex (11.8) (4.2) +181% % of depreciation 108% 61% Free cash flow 93.8 53.4 +76% % of EBITDA 119% 83% Di l d ( t f d bt t) 54 0 1 7 Disposal proceeds (net of debt repayment) 54.0 1.7 Proceeds from exercise of options 0.4 0.1 Net cash movement 148.2 55.2
C&C Group plc Slide 33
Balance Sheet & Pension
H1 2010/11
€m
Net debt* at 28 February, 2010 364.9
Net Debt to EBITDA 2.8x
Free cash flow in period (93.8) Disposals (299.0) Other 3.2 Net cash* at 31 August, 2010 24.7
Net Debt to EBITDA N/A
Pension deficit at 28 February, 2010** 21.2 Pension deficit at 31 August, 2010** 49.7
C&C Group plc Slide 34 *Excludes fair value of swap instruments amounting to a liability of €3.9m (H1 2009/10 €4.9m) ** Deferred tax asset of €6.4m reduces deficit to €43.3m at 31 August 2010 (H1 2009/10 €2.8m reduces deficit to €18.4m)
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