update on five year plan...sales growth – geography mix almarai company 2013 q1 earnings...
TRANSCRIPT
Almarai Company
2013 Q1 Earnings Presentation
Disclaimer
Information contained in this presentation is subject to change without further notice, its accuracy is not guaranteed and it may not contain all material information concerning the company. Neither we nor our advisors make any representation regarding, and assume no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, to any information contained herein.
In addition, the information contains projections and forward-looking statements that reflect the company’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the company’s assumptions are correct. Actual results may differ materially from those projected.
This presentation is strictly not to be distributed without the explicit consent of Almarai Company management under any circumstances.
Almarai Company 2 2013 Q1 Earnings Presentation
Business Highlights
Revenue of 2.4B SAR, growth of 18.2% driven by poultry 70%, juice 39% and inclusion of IDJ results.
Revenue growth of 9.4% in KSA, 9.6% in all other GCC states and 609.8% in rest of the world including Jordan and Egypt, driven by first time consolidation of IDJ. Note that this is the last quarter where consolidation effect of IDJ will impact the growth rate.
EBITDA of 509.7 million SAR grew by 13.9%, EBITDA Margin now stands at 21.1% of revenue.
EBIT of 300.8 million SAR grew by 2.9% over Q1, 2012. Whilst margin over material are now growing at a higher growth rate than revenue growth, higher labour overheads, higher depreciation and inclusion of IDJ overheads have resulted in lower EBIT growth.
Net operating cash flow of 54 million SAR is down by 85.9% over Q1, 2012, mainly driven by working capital expansion, partially due to inventory investment for poultry segment expansion plan.
Capital expenditure for the quarter was 0.7B SAR, which is in line with our earlier forecast of 3.1B capex spend for the full year 2013.
The second tranche of Sukuk program amounting to 1.3B SAR was successfully completed just prior to Q1, 2013.
The Board of Directors proposal for a dividend of SAR 0.5B (SAR 1.25 per share) was approved on 2nd April 2013 and the dividend will be paid on 10th April 2013.
Staff strength stood at more than 30K at the end of Q1, 2013. Growth in headcount accounted for part of the increase of overhead growth, including higher statutory charges, which is running in line with capacity expansion but is growing faster than volume and revenue growth. Within KSA, Almarai ranking still stands at the high end of green band in Nitaqat.
Lead the innovation efforts in our selected markets by launching 15 new products during the first quarter of 2013.
Highlights – Q1 2013
Almarai Company 4 2013 Q1 Earnings Presentation
Strong pipeline of innovation continues in 2013
5 2013 Q1 Earnings Presentation Almarai Company
Sales Highlights
Sales Growth – Geography mix
Almarai Company 7 2013 Q1 Earnings Presentation
KSA
All
Others
GCC
9.4%
9.6%
609.8%
Almarai
Group 18.2%
% Growth
Q1 2012 Rev
in B SAR
Q1 2013 Rev
in B SAR
KSA70 .6%
GCC27.9%
All Others1.5%
Q1 2012
KSA65.4%
GCC25.9%
All O thers8 .7%
Q1 2013
0 .0 3
0 .21
0 .57
0 .62
1.44
1.58
2.0 4
2.41
Sales Analysis by Product & Region
Almarai Company 8 2013 Q1 Earnings Presentation
Sales by Product
Participation vs Growth – Q1 2013
20 13 20 12 % change
Fresh Dairy 953.7 808 .2 18.0%
Long-Life Dairy 258 .7 213.5 21.2%
Fruit Juice 288 .0 207.3 39.0%
Cheese & Butter 394.8 394.9 (0.0%)
Bakery 340 .9 293.5 16.1%
Poultry 162.1 95.4 69.9%
Arable and Horticulture 6.9 15.7 (56.5%)
Other Sales 5.9 11.8 (50.4%)
Total Sales 2,411.0 2 ,0 40 .3 18 .2%
Sales by Product
Group SAR M illion
Q1
39 .6%
16 .4%
14 .1%
11.9%
10 .7%
6 .7%
18 .0%
0 .0 %
16 .1%
39 .0%
21.2%
69 .9%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Fresh Dairy
Cheese & Butter
Bakery
Fruit Juice
Long-Life Dairy
Poultry
Participation Q1 2013 Growth (Q1 2013 v Q1 2012)
40% 30% 20 % 10% 0% 10% 20% 30% 40% 50%
KSA65.4%
Kuwait5.0%
Qatar4.2%
Bahrain2.1%
UAE9.4%
Oman5.2%
Egypt4.4%
Jordan2.6%
Export / Others1.8%
Sales by Country - Q1 2013
Change in growth rates and IDJ consolidation results in higher
share of poultry , Juice and Long life dairy
Almarai Company 9 2013 Q1 Earnings Presentation
39 .6% 39 .6%
19 .4% 16 .4%
14 .4%14 .1%
10 .2%11.9%
10 .5% 10 .7%
4.7% 6 .7%
1.3% 0 .5%
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
8 0 %
90 %
10 0 %
Q 1 20 12 Q 1 20 13
O ther Sales
Poultry
Long-Life Dairy
Fruit Juice
Bakery
Cheese & Butter
Fresh Dairy
Product mix in different geographical regions highlights revenues
growth potential….
Almarai Company 10 2013 Q1 Earnings Presentation
Fresh Dairy40%
Long-Life Dairy11%
Fruit Juice12%
Cheese & Butter16% Bakery
14%
Poultry7%
Arable and Horti0%
Other Sales0%
Total
Fresh Dairy48%
Long-Life Dairy13%
Fruit Juice13%
Cheese & Butter16%
Bakery8%
Poultry2%
Other Sales0%
Gulf
Fresh Dairy38%
Long-Life Dairy8%
Fruit Juice10%
Cheese & Butter17%
Bakery18%
Poultry9%
Arable and Horti0%
Other Sales0%
KSA
Fresh Dairy25%
Long-Life Dairy28%
Fruit Juice26%
Cheese & Butter15%
Bakery2%
Arable and Horti3%
Other Sales1%
All Other Countries
`
..which can be achieved via expanding presence of Almarai
Operations throughout the region(excl Farms in Argentina)
Almarai Company 11 2013 Q1 Earnings Presentation
Distribution
centre
Manufacturing
facility
Statement of Income
Statement of Income
Almarai Company 13 2013 Q1 Earnings Presentation
SAR million 20 13 20 12 Change
Net Sales 2,411.0 2,0 40 .3 18 .2%
Cost of sales (1,583.2) (1,333.0 ) 18 .8 %
Gross Profit 8 27.8 70 7.3 17.0 %
Selling and Distribution Expenses (450 .1) (344.7) 30 .6%
General and Administration Expenses (76.8 ) (70 .1) 9.5%
EBIT 30 0 .8 292.5 2.9%
Share of Results of Associates (6.0 ) (12.3) (51.4%)
Bank Charges (38 .8 ) (27.4) 41.6%
Income from Main and Continuing
Operations256 .1 252.8 1.3%
Zakat and Income Tax (7.6) (7.9) (3.8%)
Net income before Minority Interest 248 .5 244 .9 1.5%
Minority Interest 6.6 (2.8 ) (339.4%)
Net Income 255.1 242.1 5.4%
Earnings Per Share 0 .64 0 .61 5.4%
Net Income % 10 .6% 11.9%
1st quarter
• GCC Margin over material has continued to show higher growth than revenue in Q1 2013, similar to previous quarter. However, higher depreciation, IDJ consolidation effect and overhead growth resulted in lower gross profit growth compared to revenue growth.
• Similarly, growth in overheads is driven by head count increase and IDJ consolidation, resulting in lower net profit growth relative to revenue growth
• than revenue.
Segment Reporting
Almarai Company 14 2013 Q1 Earnings Presentation
SAR MillionDairy &
JuiceBakery Poultry
Arable and
Horticulture
Other
Activities
Almarai
Consolidated
Q1 2013
Sales 1,903.6 340.9 162.1 24.4 0.0 2,431.1
Third Party Sales 1,901.2 340.9 162.1 6.9 0.0 2,411.0
Net Depreciation (140.1) (31.7) (15.9) (17.6) (3.6) (208.9)
Income/(loss) before Minority
Interest250.4 34.3 (46.1) 26.7 (16.9) 248.5
Total Assets 12,833.2 2,023.2 4,127.7 1,683.6 1,004.8 21,672.6
Total Liabilities (11,873.0) (337.1) (317.4) (238.4) (535.3) (13,301.2)
Return on Sales 13.2% 10.1% (28.4%) 390.2% n.a. 10.3%
Growth versus Q1 2012
- Third Party Sales 16.2% 16.1% 69.9% (56.5%) n.a. 18.2%
- Income before Minority Interest (7.5%) (2.5%) 44.0% n.a. 84.9% 1.5%
Trend charts
Robust revenue growth with challenging – but
anticipated – EBITDA & EBIT trend
Almarai Company 16 2013 Q1 Earnings Presentation
Revenue, EBITDA and EBIT Evolution
• After excluding the impact of IDJ consolidation in full, Net Operating income % for the last 12
months is revised to 17.6%.
2,757
3,770
5,0 30
5,8 69
6 ,931
7,951
9 ,8 8310 ,254
19 .4%
20 .7% 21.0%21.8%
21.1%
19.1%
16.9%16.4%
25.7% 26 .0%25.3%
26 .7% 27.2%
25.6%
24.2% 23.9%
20 0 6 20 0 7 20 0 8 20 0 9 20 10 20 11 20 12 Last 12 months
SA
R in
Mill
ion
Revenues
EBIT %
EBITDA %
CAGR 2006 –2013: 20 .6% (w/o impact of acquisit ions 19.4%)
Quarterly Performance – Net Income
Almarai Company 17 2013 Q1 Earnings Presentation
90.6
122.8
162.2
197.4
234.1
235.2
242.1
255.1
121.8
165.3
235.2
287.1
343.1
349.3
379.5
122.6
186.1
293.7
363.4
424.5
429.7
450.0
130.2
193.1
219.2
248.8
283.5
285.5
369.0
0
50
100
150
200
250
300
350
400
450
SA
R M
illio
n
Q1 = 5.4%
2013 versus 2012
Cash Flows
Cash Flow Statement (Q1 2013)
Almarai Company 19 2013 Q1 Earnings Presentation
Higher revenue growth
resulted in positive operating
cash flow, which was
partially subdued by working
capital expansion,….
….but additional capex
investment, especially for
poultry (0.2B) resulted in
negative free cash flow of
0.6B
4 17 54
2,0 06
6 8 2 1
1,794
0
50 0
1,0 00
1,500
2,0 00
2,500
3,0 00
Cash at
beginning of period
From
O perating Act ivities
From Financing
Act ivities
Used in
Investing Act ivities
Currency
Impact
Cash at end of
period
SA
R M
illio
n
SAR M illion 20 13 20 12
From Operat ing Act ivit ies 54 383
Used in Invest ing Act ivit ies (682) (832)
Cashflow Av'ble for Dist 'n (629) (449)
From Financing Act ivit ies 2,006 465
Increase/(Decrease) in Cash 1,377 16
Currency Impact on Cash
& Cash Equivalent(1)
Cash at beginning of period 417 272
Cash at end of period 1,794 28 8
Q 1
Cash Flow Bridge – rolling 12 months
Almarai Company 20 2013 Q1 Earnings Presentation
28 8
2,0 55
1,447
1,300 (2,767)
(512)
(17) 1,794
Cash at 31 M ar 2012
Operating Cash Flow
Loans Issues / Others
Sukuk
Capex
Dividend Others
Cash at 31 M ar 2013
+ SAR 1,506 m
Balance Sheet
Balance Sheet
Almarai Company 22 2013 Q1 Earnings Presentation
SAR M illion 31/0 3 /13 31/0 3 /12
1,373 1,037
919 855
13,845 11,854
16,137 13,746
1,335 1,383
298 596
17,770 15,725
8 ,983 7,450
302 254
114 130
8 ,371 7,891
17,770 15,725
107.3% 94.4%
Net Operat ing Working Capital
Biological Assets
Property , Plant and Equipment
Net Operat ing Assets
Total Equity
Net Capital Employed
Net Debt to Equity Rat io
Intangible Assets - Goodwill
Investment and Financial Assets & Deferred
Charges
Net Debt
Employee Terminat ion Benefits
Deferred Tax (Net)
Net Debt
Almarai Company 23 2013 Q1 Earnings Presentation
1,315 2,463 3,499 3,951 4,679 6,749 8,305 8,983
69% 81%
96% 73% 76%
100% 102% 107%
2.0x
2.3x 2.3x 2.4x 2.3x
2.8x
3.2x 3.4x
0%
50%
100%
150%
200%
250%
300%
350%
400%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2006 2007 2008 2009 2010 2011 2012 Last 12 months
Net Debt Net Debt / Equity Ratio Net Debt / EBITDA
in m
illio
nS
AR
Debt Profile highlights balanced approach for
funding….
Almarai Company 24 2013 Q1 Earnings Presentation
0 .0
0 .5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2013 2014 2015 2016 2017 2018 & Beyond
SA
R B
illio
n
Debt Maturity by Age and Type
Islamic Bonds
Govt / Semi Govt Inst .
Banks
6 .4 ,
65%1.1,
12%
2.3 ,
23%
Capital Expenditure
Capex spend in line with Guidance…
Almarai Company 26 2013 Q1 Earnings Presentation
Capex spend of 0.7B SAR, which is in line for with our earlier forecast of 3.1B SAR for the year 2013.
Poultry capex spend for the quarter amounted to slightly more than 0.2B SAR. The key highlight for Q1
was the commercial production start of the first of the three lines.
Each of the three main functions of Sales,
Manufacturing and Farming consumed capex of ~0.1B
SAR.
Replacement and other capex including IDJ,
accounted for another 0.1B SAR.
Key Share Data
Almarai Company 27 2013 Q1 Earnings Presentation
0 %
50 %
10 0 %
150 %
20 0 %
250 %
30 0%
Almarai TASI
Key Stat ist ics for Almarai (1 April 20 13 )
Current P/E Rat io (t tm) 18 .9
Est imated P/E(12/20 13 ) 16 .8
Earnings Per Share (SAR) (t tm) 3 .6
M arket Cap (M SAR) 27,198
Shares O utstanding (M ) 40 0 .0
30 Day Average Volume 212,0 20
Dividend Indicated Gross Yield 1.8 %
Cash Dividend (SAR) 1.3
Last Dividend 4 /3 /20 13
5 Year Dividend Growth 12.5%
Q & A
Almarai Company 28 2013 Q1 Earnings Presentation
Thank you
Almarai Company
Exit 7, North Circle Road
Al Izdihar District
P.O. Box 8524
Riyadh, 11492
Saudi Arabia
Contact for investor relations matters:
Khalid M. Al Nasser
+966 1 470 00 05 ext 1280