Q Results and Outlook

Transcription

1 Q Results and Outlook

2 Today s agenda EAC at a glance & Group strategy Highlights and events EAC s Four Strategic Businesses EAC Nutrition EAC Foods EAC Industrial Ingredients EAC Moving & Relocation Services Results for Q Outlook for 2003 EAC Page 2

3 EAC continues its strategy of growth EAC acquires the Dumex trademark on a global basis. EAC has acquired full ownership rights of the Dumex trademark in China, Cambodia, Hong Kong, Japan, Laos, Mongolia, the Philippines, South Korea, Taiwan and Vietnam as of the end of Purchase price of USD 1.25m (DKK 8m) includes an option to acquire the Dumex trademark without additional payment in all remaining countries, where Alpharma is the registered owner. EAC now owns the Dumex trademark in all markets throughout Asia. EAC Page 3

4 Completion of China acquisition EAC has completed the acquisition of cereal brand and operation in Hangzhou. EAC completed the acquisition of Hangzhou Future s assets and business on November 3 rd Total consideration was USD 7.4m (DKK 48m) Hangzhou Future facilities in Fuyang Modern packaging facility Upgraded in year 2002 EAC Page 4

5 Profitable disposal of Plumrose in Ecuador EAC has completed the divestment of its subsidiary in Ecuador under the EAC Foods business. Consideration of DKK 140m 46.5% minority stake acquired in 2001 for DKK 38.4m Profit from sale of subsidiary of about DKK 68m Effective September 1 st, 2003 Completion October 27 th 2003 The sale has no impact on the activities of EAC Foods in Venezuela. EAC Page 5

6 Q3 highlights EAC Page 6

7 Highlights Q Nutrition: Quarterly sales record in Thailand Net sales up 21% measured in local currencies Operating margin of 9.5%, above expectation Foods: Disposal of Ecuadasa; growth in sales and profit Net sales up 4% measured in DKK (VEB/DKK devaluation of 46%) Operating margin of 6.3%, positively impacted by lower raw material prices and operating efficiencies Industrial Ingredients: Higher growth than expected Double-digit growth in net sales of 18% measured in local currencies Operating margin of 13.1% in line with expectation Moving & Relocation: Good high season in Q3 Growth in net sales of 10% measured in local currencies Operating margin of 7.9% in line with expectation EAC Page 7

8 Highlights for the first 9 months Nutrition: growth driven by China and Thailand Net sales up 11% measured in local currencies Operating margin of 11.8%, reflecting deferrals in A&P expenses and savings in production Foods: improvement in market share to 39.6% Growth in net sales of 29% in Venezuela in local currency; market share improvements Operating profit slightly ahead of plan; operating margin of 8.2% Industrial Ingredients: major markets sustained strong growth Double-digit growth in net sales of 17% measured in local currencies Operating margin of 14.2% fully in line with expectation Moving & Relocation: relocations pick up after SARS Growth in net sales of 11% measured in local currencies Operating profit slightly ahead of latest expectations EAC Page 8

9 In summary: Strong growth YTD in 2003 Double-digit growth for all strategic businesses in local currencies; higher than expected profit in EAC Nutrition Operating profit for the first 9 months was DKK 246m which was above expectations Last years profit of DKK 303m included DKK 39m net as one-off income Net profit for the first 9 months of DKK 139m is ahead of expectations EAC Page 9

10 EAC s Four Strategic Businesses EAC Nutrition EAC Foods EAC Industrial Ingredients EAC Moving & Relocation Services EAC Page 10

11 Nutrition: Profile EAC Nutrition develops, produces and markets a wide range of infant and child nutrition products. EAC Nutrition enjoys market-leading positions in its established markets in China, Malaysia, Singapore and Thailand.

12 Nutrition: Highlights Launch of super premium products in Singapore and Malaysia under Mamex and Mamil Gold formulae EAC Page 12

13 Nutrition: Highlights Acquisition of the Dumex trademark on a global basis from Alpharma ApS. Net sales increased by 11% in local currencies Record quarterly sales in Thailand in Q3 Higher operating margin than expected of 11.8% Q3 operating margin of 9.5% ahead of expectations, influenced by A&P deferrals Efficiency gains from increased local blending Higher raw material costs for second half EAC Page 13

14 Nutrition: YTD Q3 results DKK million /02 Net sales 1,326 1,429-7% EBITA % Operating profit % Operating margin 11.8% 9.1% 2.7pp Operating profit, excl. one-offs * +33% Operating margin, excl. one-offs 11.8% 8.3% 3.5pp Yoplait profit in Q of DKK 12m: Deal aborted, reversed DKK 10m of gains in Q EAC Page 14

15 Nutrition: Quarterly sales % DKKm % 30% 20% 10% 0% -10% 0 Q Q Q Q Q Q Q Q Growth (local currencies) Q Q Q Q Q % Net sales Quarterly growth Q heavily affected by the recall of contaminated products in Thailand EAC Page 15

16 Nutrition: Quarterly earnings DKKm % 14% 12% 10% 8% 6% 4% 2% 0% Q Q Q Q Q Margin in % Q Q Q Q Q Q Q Q EBIT in DKK excluding one-offs EBIT margin Q heavily affected by the recall of contaminated products in Thailand EAC Page 16

17 Nutrition: Market performance New product launches in Malaysia Launch of super premium range in Singapore and Malaysia under Mamex Gold & Mamil Gold branding Commencement of export to Thailand of canned products; increase productivity at EAC s most modern production facility in Nilai Thailand had record quarterly sales in Q3 Continued growth driven by new product launches of GUM variants Operating margin better than expected in Q3 due to pricing, sales mix and productivity improvements Continued positive sales growth in China Growing-Up-Milk key driver of growth; double digit growth for Dumex brand Increase in marketing spending in Q4 to launch new premium product range Interim dividend declared, approved and paid Dumex India commences operations during Q3 Sales in August and September have been rising to a level well above that previously generated by Pfizer EAC Page 17

18 Nutrition: Outlook Outlook for net sales maintained, with double-digit growth measured in local currencies China continues as the driver of growth, with Thailand expecting to deliver higher growth than previously forecasted Improved outlook for operating margin; now expected to be around 10% Lower operating margin in Q4 due to; increased A&P spend for product launches in China and Thailand expansion of infrastructure in India higher cost prices for GUM products from mid-year EAC Page 18

19 Foods: Profile EAC Foods is an integrated manufacturer and distributor of processed meat products in Venezuela. Operating under the brand names Plumrose and Oscar Mayer. EAC Foods is the market leader and is the most innovative company with regard to product development.

20 Foods: YTD Q3 results Q3 H H1 Q Announcement DKK million 2003* /02 Net sales 828 1,137-27% EBITA % Operating profit % Operating margin 8.2% 7.7% 0.5pp *Results for Ecuadasa only included until August 31 EAC Page 20

21 Foods: Quarterly sales Q % % % 10% 0% % 0-20% Q Q Q Q Q Q Q Q Q Q Q Q Q EAC Page 21 DKKm Growth (local currency) Net sales Growth *Results for Ecuadasa only included until August 31

22 Foods: Quarterly earnings Q3 DKKm % 14% 12% 10% 8% 6% 4% 2% 0% Q Q Q Q Q Margin in % Q Q Q Q Q Q Q Q EBIT in DKK excluding one-offs EBIT margin *Results for Ecuadasa only included until August 31 EAC Page 22

23 Foods: Highlights Q3 GDP decline of more than 15%, however: Volumes YTD exceeded plan at only 3% below last year Market share for processed meats increased by almost 3pp to 39.6% Net sales in DKK reduced by 27% to DKK 828m devaluation effect of DKK 369m VEB/USD net sales during Q3 increased by 4% to DKK 288m despite currency devaluation Operating margin of 8.2% is 0.5pp ahead of last year EAC Page 23

24 Foods: Market development Q3 During the past two months a recovery in sales product mix with increasing participation of premium products, hams and wiener sausages YTD selling price increase of average 25% with further price increases planned for Q4 Pig prices have increased significantly in the past two months; increasing benefits from delivery from own farms (close to 60% of demand) has secured raw material for the important Christmas sales EAC Page 24

25 Foods: Outlook Q3 Outlook maintained effect on net sales and operating profit from divestment of Ecuadasa offset by higher sales in Venezuela at a stable VEB exchange rate of 1,600 to the USD Collection of signatures to initiate referendum for presidential recall expected to take place end of November Net sales measured in DKK approximately 20% lower than 2002 Operating profit slightly above 2002 Operating margin (excluding one-offs) expected to be around 9% as compared to 7% in EAC Page 25

26 Industrial Ingredients: Profile From its strong platform as a market leading independent distributor of industrial ingredients in Thailand, EAC Industrial Ingredients has successfully expanded its distribution business in Southeast Asia. In addition, Industrial Ingredients holds investments in a number of production joint ventures in Thailand.

27 Industrial Ingredients: YTD Q3 results Q3 DKK million /02 Net sales % EBITA % Operating profit % Operating margin 14.2% 14.5% -0.3pp EAC Page 27

28 Industrial Ingredients: Quarterly sales Q % 25% 20% 15% 10% 5% 0% -5% -10% EAC Page 28 Q Q Q Q Q Q Q Q Q DKKm Q Q Q Q Growth (local currencies) Net sales Growth

29 Industrial Ingredients: Quarterly earnings Q % 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% EAC Page 29 Q Q Q Q Q Q Q Q Q Q DKKm Q Q Q Margin in % EBIT in DKK excluding one-offs EBIT margin

30 Industrial Ingredients: Strong underlying growth continues in Q3 Q3 Net sales grew 18% measured in local currencies during Q3; continued positive development in Thailand and strong double-digit growth in Vietnam, Philippines and Indonesia over Q YTD growth of 17% in net sales in local currencies Slightly reduced margins during Q3, however, still in line with expectation Good performance in joint ventures EAC Page 30

31 Industrial Ingredients: Outlook Q3 In local currency terms outlook has improved Full year expectation of net sales in DKK maintained: slightly lower than 2002 (DKK 668m) Operating profit now expected to be similar to 2002 EAC Page 31

32 Moving & Relocation Services: Profile EAC Moving & Relocation Services is a market leading player in the Asian moving and relocation industry. Operating from 23 locations and covering a wide range of destinations; services include value-added relocation, household removals, office relocations and records management

33 Moving & Relocation Services: YTD Q3 results Q3 DKK million /02 Net sales % EBITA % Operating profit % Operating margin 3.4% 4.2% -0.8pp EAC Page 33

34 Moving & Relocation Services: Quarterly sales Q % 50% 40% 30% 20% 10% 0% -10% -20% EAC Page 34 Q Q Q Q Q Q Q Q Q Q DKKm Q Q Q Growth (measured in local currencies) Sales Growth

35 Moving & Relocation Services: Quarterly earnings Q % 12% 10% 8% 6% 4% 2% 0% -2% -4% EAC Page 35 Q Q Q Q Q Q Q Q Q Q Q DKKm Q Q Margin in % EBIT in DKK excluding one-offs EBIT margin -6%

36 Moving & Relocation Services: High season better than expected Q3 Net sales increased by 10% during Q3 in local currencies; growth driven by China, Hong Kong and Singapore Inbound relocations have started to pick up in SARS affected areas such as Hong Kong and Singapore Stronger revenue during Q3 from freight forwarding activities from Hong Kong to Europe and US Operating profit of DKK 11m in Q3 ahead of latest expectation; almost on par with last year (DKK 12m) EAC Page 36

37 Moving & Relocation Services: Outlook Q3 Based on Q3 results, the outlook is maintained Outlook for net sales in local currencies now expected to be higher than 2002; measured in DKK net sales will be below 2002 (DKK 499m) Operating margin expected to be around 3%; in line with previous expectations EAC Page 37

38 Other Activities: Profile Other Activities consists of minor businesses outside the strategic businesses. Remaining in this segment are EAC Trading (projects and wool) and EAC Holdings Malaysia (transport and property)

39 Other Activities: YTD Q3 results DKK million /02 Net sales % Operating profit The wind down of EAC Wool through liquidation of inventories has negatively affected results for the first 9 months by DKK 9m and is expected to negatively impact full year results with a nonrecurring cost of DKK 12m EAC Page 39

40 Q3 results for the Group EAC Page 40

41 Income statement Q3 DKK million /02 Net sales Strategic businesses 1, % Other businesses % EBITDA Operating profit Financing, net Revaluation fixed assets inv. Taxes Profit after tax Net profit % % % % % EAC Page 41

42 Income statement YTD Q3 DKK million /02 Net sales Strategic businesses 3,001 3,449-13% Other businesses 72 1,432-95% EBITDA Operating profit Financing, net Revaluation fixed assets inv. Taxes Profit after tax Net profit % % % % % % EAC Page 42

43 Group sales affected by DKK 960m due to exchange rates Devaluation of VEB against the USD affected net sales translation by DKK 369m Net sales for EAC Foods decreased by 27% (DKK 309m), in VEB net sales increased by 20% 2,000 1,800 VEB/USD 1,600 1,400 1,200 1, J M M J S N J/03 M/03 M/03 J/03 S/03 EAC Page 43

44 DKK strength affects translation of sales Net sales for Asian businesses increased by 12% using last year s exchange rate DKK sales decrease by 6% Net sales for EAC Nutrition increased by 11% using same exchange rates DKK sales decrease by 7% 8.75 DKK/USD J M M J S N J/03 M/03 M/03 J/03 S/03 EAC Page 44

45 Net sales: growth despite lower sales DKK million /02 Nutrition 1,326 1,429-7% Foods 828 1,137-27% Industrial Ingredients % Moving & Relocations % Subtotal 3,001 3,449-13% Other activities % Disposed business 0 1,318 Total 3,073 4,881-37% EAC Page 45

46 Growth of 15% - excluding exchange rate differences DKK million /02 Nutrition 1,584 1, % Foods 1,364 1, % Industrial Ingredients % Moving & Relocations % Subtotal 3,957 3, % Note: 2003 figures are restated at last year s exchange rate for comparison analysis EAC Page 46

47 Operating profit YTD Q3 DKK million Nutrition Foods Industrial Ingredients Moving & Relocations Subtotal Other activities Disposed business Unallocated inc./exp., net Total / % 88-23% 73-4% 16-25% 307 0% % % EAC Page 47

48 Operating result - adjusted for non-recurring items DKK million Nutrition Foods Industrial Ingredients Moving & Relocations Subtotal Other activities Disposed business Unallocated inc./exp., net Total - disposed businesses Continuing activities / % 88-23% 73-4% 16-25% % 12-58% % 264-3% % EAC Page 48

49 Operating margin based on continued businesses better than last year % /02 Nutrition pp Foods pp Industrial Ingredients pp Moving & Relocations pp Strategic businesses pp Total Group pp Note: Margins are based on operating profit adjusted for non-recurring items EAC Page 49

50 Reduced financing, net DKK Million /02 Income % Expenses % Translation adjustments and exchange gain/ losses, net -5-5 Revaluation fin. fixed assets 1-5 Financing income and expenses, net % EAC Page 50

51 Balance Sheet as at 30 September Working Capital decreased during Q3 to DKK 778m lower inventory level in EAC Nutrition and EAC Wool from the continued liquidation of inventories. Positive cash flow from operations major cash outflow as at September are related to purchase of the Procer farm in Venezuela, dividend paid and share buy back from the parent company net interest bearing cash of DKK 785m -7% -4% +1% 4,500 4,000 3,500 mdkk 3,000 2,500 2,000 1,500 1, / / Total assets Equity Net interest bearing cash EAC Page 51

52 Invested capital in strategic businesses as at 30 September EAC Nutrition +14% vs EAC Foods +10% vs DKKm EAC Industrial Ingredients +4% vs EAC Moving & Relocation Services -14% vs EAC Page 52

53 Ratios /02 Operating margin 8.0% 6.2% +1.8pp Solvency ratio 63.1% 61.0% +2.1pp Return on invested capital 18.2% 17.0% +1.2pp Annualised EPS Equity per share Stock exchange quotation end of period Number of employees 5,615 6, EAC Page 53

54 Expected Full Year EAC Page 54

55 Group: Expected GDP growth EAC Page 55 China Hong Kong India Malaysia Philippines Singapore Real GDP, % Thailand Venezuela Kilde: Consensus Economics Inc. October 2003

56 Group: Outlook 2003 EAC maintains its overall outlook for the year Improvement in performance at Nutrition, Plumrose Venezuela and Industrial Ingredients Fixed VEB leads to positive currency impact versus assumption Negative translation impact due to strong DKK versus assumption Loss of sales and operating profit due to divestment of Ecuadasa Profit from sale of EAC Foods s activities of around DKk 68m in Ecuador will be taken up in Q4 Non-recurring impact of wind down of Wool activities of DKK 12m EAC Page 56

57 Group: Outlook Net sales Net sales for strategic businesses located in Asia in aggregate are expected to grow by double digits in local currencies. In DKK, net sales expected to be slightly lower due to continued adverse exchange effects EAC Foods still expected to be around 20% below 2002 in DKK Operating profit Now expected to be slightly above DKK 300m compared to DKK 341m in 2002 (adjusted for one-off s) The comparison with 2002 is adversely affected by around DKK 130m at EBIT level Outlook can be affected by changes in exchange rates and acquisitions / sale of businesses EAC Page 57

58 Thank you