Almarai Company. Annual Results 2017

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Alexina King
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1 Annual Results 2017

2 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 management under any circumstances Q4 Earnings Presentation 2

3 Macro Environment

4 Industry and Environment Overview First Half Higher uncertainty amid multiple reforms and macroeconomic changes Lower consumer confidence/sentiment and slower market growth, specially in discretionary sectors Certain frozen products from Brazil were banned due to health concerns Increases in energy costs Government support payments were resumed Commodity prices remain at historically low levels Starting of import levy on frozen products 2017 Second Half Continued expansion in non-traditional channels like Food services & Iktisaab (rural distribution model in Egypt) Expat levy was introduced from July Iraq border were re-opened Increased M&A activity, resulting in consolidation in the F&B Sector Higher supply of milk driven by imbalance in global dairy markets Tightening of Monetary Policy resulting in higher funding cost How Almarai Responded? Innovation driving top-line growth supporting market share position Continued cost optimization and efficiency journey resulting in nearly ~ SAR 300M savings Better product portfolio management Optimizing asset utilization Launch of key new products in new categories of Liquid Milk & Long life Juice Commissioning of Central Processing Plant 3 to further enhance production efficiency 2017 Q4 Earnings Presentation 4

5 Almarai Gaining Market Share Despite Declining KSA Food Market Source: Nielsen Company MAT Nov-17 MAT Category growth (Value)% Almarai MAT Val. Shr Change Almarai Rank (Value) PLAIN REGULAR LABAN -9.6% PLAIN FRESH MILK -4.9% FLAVORED FRESH MILK -28.4% UHT MILK -8.0% ZABADI -3.8% FRESH GISHTA -12.0% FRUIT JUICE BOTTLES -20.9% BUTTER -3.9% CHEESE JARS -10.6% CHEESE SLICES -8.3% CHEESE TRIANGLES -10.0% FETA CHEESE -8.7% TOTAL WHIP & COOKG CREAM +5.2% SLICED BREAD -5.4% PUFFS -18.1% CROISSANTS -10.9% CUP CAKES +41.3% WHOLE CHICKEN -5.2% KSA Food Market is declining by 3.0% on MAT basis. Core Dairy - Both Laban and Fresh milk categories in decline Discretionary categories are in accelerated decline (Juices, Jar Cheese, Ghista, Cheese Slices) 2017 Q4 Earnings Presentation 5

6 Market Share(Volume) - KSA Laban UHT Juices Puffs MAT NOV 16 MAT NOV 17 MAT NOV 16 MAT NOV 17 MAT NOV 16 MAT NOV 17 MAT NOV 16 MAT NOV 17 Fresh Milk Bread Chicken Jar Cheese MAT NOV 16 MAT NOV 17 MAT NOV 16 MAT NOV 17 MAT NOV 16 MAT NOV 17 MAT NOV 16 MAT NOV Q4 Earnings Presentation 6

7 Business Highlights

8 Highlights Full Year 2017 Almarai is FCF positive SAR 1.3B after a 10+ year investment cycle Strong turnaround in our poultry operations resulting in first ever annual breakeven of poultry operations at SAR 0.6M Amid generally lower market growth trends across product categories, we have retained and in most cases, gained market share across nearly all categories Continued progress in our cost and efficiency programs by the agility we have developed at every level of our business resulted in cost savings of nearly SAR 300M Egypt market struggled in the first half however it stabilised in the 2nd half resulting in higher than 30% growth in local currency for our key product portfolio. CAPEX investment reduced year-on-year by SAR 1.6B to reach SAR 2.8B CPP3 plant opened in November 2017 to further our capacity in Dairy and Juice category Innovation: Introduced 42 new products including our long life juice product Joosy Life. Additionally, we introduced our game changing liquid infant nutrition product which is the first of it s kind in the GCC Maintained our Nitiqat status as Platinum in most of our Keyans. Established a new Food Service Business Unit to service the growing HORECA (hotel, restaurant, catering) channel We continue to invest and develop our talent internally through multiple programs including the Future Leaders Program and Graduate Professionals Program to name a few Q4 Earnings Presentation 8

SAR in Billion In Thousand SAR in Billion Key Trends for 2017 SAR in Billion 4.0 3.8 3.6 3.4 3.2 0.3% Net Sales -4.2% -4.5% -2.6% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% Y 2017 Y 2016 Y17 v Y16 1.0 0.8 0.

9 SAR in Billion In Thousand SAR in Billion Key Trends for 2017 SAR in Billion % Net Sales -4.2% -4.5% -2.6% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% Y 2017 Y 2016 Y17 v Y Operating Income 15.0% 13.2% 10.0% 3.9% 5.0% 3.1% 0.0% -5.7% -5.0% Y 2017 Y 2016 Y17 v Y SAR 11.2 B Q % Q2 Q3 Q4-5.0% - Q1 Q2 Q3 Q4-10.0% Profit Attributable to Shareholders SAR in Billion % 15.0% % 2.4% 5.0% Y % 0.0% Y % 0.2 Y17 v Y16-5.0% % Q1 Q2 Q3 Q4 SAR in Billion Operating Cash Flow 61.6% 2.8% 22.4% -26.9% Q1 Q2 Q3 Q4 80.0% 60.0% 40.0% 20.0% 0.0% -20.0% -40.0% Y 2017 Y 2016 Y17 v Y Investing Cash Flow -20.9% -33.3% 0.0% -10.0% -20.0% -30.0% -40.0% -39.9% -38.9% -50.0% Q1 Q2 Q3 Q4 Y 2017 Y 2016 Y17 v Y Q4 Earnings Presentation Employees 2.2% -1.1% -2.3% -4.2% Q1 Q2 Q3 Q4 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% Y 2017 Y 2016 Y17 v Y16 9

10 Sales Trends

Cheese & 13% Butter 1,681 12% SAR 14,339

Fruit Juice Million 1,601 11% Fresh Dairy

11 Sales Analysis by Product Full Year By Product 2016 By Product 2017 Bakery 1,881 Cheese & 13% Butter 1,681 12% SAR 14,339 Fruit Juice 1,877 Million 13% Long-Life Dairy 1,500 11% Poultry 1,332 9% Other Sales 165 1% Fresh Dairy 5,903 41% Poultry Bakery 1,464 1,807 10% 13% Other Sales Cheese & 154 Butter 1% 1,749 13% SAR 13,936 Fruit Juice Million 1,601 11% Fresh Dairy Long-Life 5,674 Dairy 41% 1,486 11% 2017 Q4 Earnings Presentation 11

Cheese & Butter ( YoY +4%) Fruit Juice ( YoY -15%) Long Life ( YoY -1%) Poultry ( YoY +10%) Other Sales ( YoY -6%)

12 Sales Analysis by Product Full Year Net Sales in SAR Million 14,339 13,936 Fresh Dairy ( YoY -4%) Growth % of Total 2017 v 2016 Growth (229) (2%) 41% 41% 13% 13% 12% 13% 13% 11% 10% 11% 9% 11% 1% 1% Y 2016 Y 2017 Bakery ( YoY -4%) Cheese & Butter ( YoY +4%) Fruit Juice ( YoY -15%) Long Life ( YoY -1%) Poultry ( YoY +10%) Other Sales ( YoY -6%) Total ( YoY-3%) (74) (1%) 68 0%) (276) (2%) (15) (0%) 132 1%) (11) (0%) (403) (3%) 2017 Q4 Earnings Presentation 12

13 Sales Analysis by Country Full Year By Geography 2016 By Geography 2017 Oman 724 5% UAE 1,375 10% Qatar Egypt Bahrain Export / Others Kuwait 5% 7% 2% Jordan 2% 4% 282 2% SAR 14,339 Million UAE 1,401 10% Oman 738 5% Qatar Egypt Bahrain 326 Kuwait % 704 5% 2% 5% Jordan 286 2% SAR 13,936 Million Export / Others 220 2% KSA 9,057 63% KSA 9,300 67% 2017 Q4 Earnings Presentation 13

14 Sales Analysis by Country Full Year Net Sales in SAR Million 14,339 13,936 63% 67% 10% 10% 5% 5% 5% 7% 5% 5% 5% 2% 2% 2% 2% 2% 2% 2% Y 2016 Y 2017 KSA ( YoY +3%) UAE ( YoY +2%) Oman ( YoY +2%) Kuwait ( YoY +7%) Egypt ( YoY -33%) Qatar ( YoY -53%) Bahrain ( Yoy +7%) Jordan ( YoY +1%) Others ( YoY -21%) Total ( YoY -3%) Gro w th v % o f To ta l Gro w th 243 2% 27 0% 15 0% 48 0% (326 ) (2% ) (374) (3% ) 19 0% 4 0% (58) (0% ) (403) (3% ) Egypt Local Currency Growth = 35.2% 2017 Q4 Earnings Presentation 14

15 Innovation Pipeline 2017 Q1 Q2 Q4 Q Q4 Earnings Presentation 15

16 Financial Highlights

7% 07 pp SAR Million 5,522 5,584 +61 +1.1% SAR Million 2,518 2,583 +66 +2.

17 Operating Performance Gross Profit Operating Income Profit Attributable to Shareholders % to Sales 38.5% 40.1% 1.6 pp 17.6% 18.5% 0.9 pp 15.0% 15.7% 07 pp SAR Million 5,522 5, % SAR Million 2,518 2, % SAR Million 2,148 2, % Year 2016 Year 2017 Year 2016 Year 2017 Year 2016 Year Q4 Earnings Presentation 17

18 Statement of Income SAR million 4th Quarter Full Year Change Change Net Sales 3,509 3,419 (2.6%) 14,339 13,936 (2.8%) Cost of sales (2,120) (2,083) (1.7%) (8,816) (8,352) (5.3%) Gross Profit 1,389 1,335 (3.8%) 5,522 5, % Selling and Distribution Expenses (579) (556) (4.0%) (2,480) (2,392) (3.6%) General and Administration Expenses (100) (93) (7.4%) (433) (397) (8.2%) Other Expense, net (74) (88) 18.3% (91) (211) 130.9% Operating Income (5.7%) 2,518 2, % Exchange Gain / (Loss) 9 (3) (136.9%) 45 7 (84.1%) Finance Costs - net (97) (105) 8.2% (351) (401) 14.2% Share of Results of Associates and Joint Ventures % (2.3%) Profit Before Zakat and Income Tax (9.5%) 2,224 2,202 (1.0%) Zakat and Foreign IncomeTax (17) 9 n.a. (74) (42) (43.2%) Profit for the Period (4.8%) 2,150 2, % Profit Attributable to Non Controlling Interest % (2) 22 n.a. Profit Attributable to Shareholders (4.4%) 2,148 2, % Earnings Per Share ( Basic) % Profit Attributable to Shareholders % 15.3% 15.0% 15.0% 15.7% 2017 Q4 Earnings Presentation 18

19 Segment Reporting SAR Million Dairy & Juice Bakery Poultry Other Activities Almarai Consolidated Q4 YTD 2017 Net Sales 10,510 1,807 1, ,936 Depreciation and Amortisation (1,222) (228) (309) (161) (1,920) Profit Attributable to Shareholders 2, (29) (130) 2,182 Percent to Net Sales of Profit Attributable to Shareholders 19.5% 16.2% (2.0%) (84.4%) 15.7% Total Assets 20,469 2,464 5,708 3,255 31,896 Growth versus Net Sales (4.1%) (3.9%) 9.9% (6.4%) (2.8%) - Profit Attributable to Shareholders (10.4%) (11.9%) 90.1% 26.8% 1.6% Q Net Sales 2, ,419 Depreciation and Amortisation (319) (63) (81) (38) (502) Profit Attributable to Shareholders (70) 513 Percent to Net Sales of Profit Attributable to Shareholders 19.7% 15.4% 3.4% (201.3%) 15.0% Growth versus Q Net Sales (3.1%) (7.2%) 6.6% 11.2% (2.6%) - Profit Attributable to Shareholders (11.9%) (17.1%) (131.7%) 4.3% (4.4%) 2017 Q4 Earnings Presentation 19

20 Net Income by Segment SAR Million Basic EPS* (SAR) ,500 2,148 (224) ,182 2,000 (40) 1,500 1,000 Year 2016 Dairy & Juice Bakery Poultry Other Year 2017 Net Sales Growth (4.1%) (3.9%) 9.9% (6.4%) (2.8%) Net Income Growth (10.4%) (11.9%) 90.1% 26.8% 1.6% Net Income % 19.5% 16.2% (2.0%) (84.4%) 15.7% *EPS Earnings Per Share 2017 Q4 Earnings Presentation 20

Investing Cash Flows continue the downward trend in line with revised 5 year Business Plan SAR in

2017 was SAR 2.8 Billion. Manufacturing and Farming spent CAPEX of SAR ~1.

Sales Depot, Poultry and Logistics expansion accounted for SAR ~0.6 Billion.

6,000 39% 45% 5,000 4,000 30% 31% 29% 32% 33% 29% 25% 32% 33% 4,409 4,900 24% 3,000 3,575 3,284

21 Investing Cash Flows continue the downward trend in line with revised 5 year Business Plan SAR in Millions 50 % 40 % 30 % 20 % 10 % 0% -10% -20 % -30 % CAPEX spend for the 4 th Quarter Year to Date 2017 was SAR 2.8 Billion. Manufacturing and Farming spent CAPEX of SAR ~1.7 Billion for various capacity expansion projects. Sales Depot, Poultry and Logistics expansion accounted for SAR ~0.6 Billion. Replacement and other CAPEX including IDJ accounted for another SAR ~0.5 Billion. 6,000 39% 45% 5,000 4,000 30% 31% 29% 32% 33% 29% 25% 32% 33% 4,409 4,900 24% 3,000 3,575 3,284 3,302 3,115 3,312 2,000 2,189 1,000 1,488 1,572 1, Net Cash Used in Investing Activities Investment as a % of Net Sales 2017 Q4 Earnings Presentation 21

22 Cash Flow Bridge Free Cash Flow = SAR 1.3 B (SAR1.8B over 2016) 4, (3,312) Loans Issues / Payments / Charges (718) CAPEX / Biological (78) 1, Assets Dividend Others Cash at 31 Dec 2016 Operating Cash Flow + SAR 1,072 Million Cash at 31 Dec Q4 Earnings Presentation 22

23 Key Trends

24 Net Debt SAR Million 12,000 10, x 3.1x 3.0x 2.8x 2.7x 2.7x 2.7x 2.8x 350% 300% 8, x 250% 6, % 150% 4,000 74% 98% 101% 75% 75% 74% 81% 81% 73% 100% 2,000 50% 0 4,606 6,653 8,237 8,053 8,762 9,344 10,889 10,883 10, % SOCPA IFRS Net Debt Net Debt / Equity Ratio Net Debt / EBITDA 2017 Q4 Earnings Presentation 24

25 Quarterly Performance Net Income Trend Analysis SAR Million 2017 versus Q 2 = 2.4% # Q3 = 0.4% 664 # 667 Q4 = (1.6%) Q1 = 13.7% # * # # IFRS revaluation adjustments Capital gain of SAR 47m in 2012 * 2017 Q4 Earnings Presentation 25

26 EBIT and EBITDA margins are starting to improve SAR Million Net Sales, EBITDA and EBIT Evolution 27.2% 25.6% 21.1% 19.1% Net Sales EBIT % to Net Sales EBITDA % to Net Sales CAGR : 10.5% (w/o impact of acquisitions 6.9%) 24.2% 24.4% 23.9% 24.2% 16.9% 9,883 11, % 13,795 12, % 16.4% 28.1% 25.9% 25.3% 14,339 14,699 13, % 17.3% 17.5% 7,951 6, SOCPA IFRS 2017 Q4 Earnings Presentation 26

27 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Key Share Data Year to date total shareholder's 450% 400% 350% 300% 250% 200% Key Statistics for Almarai (31 December 2017) Share Price (SAR) Current P/E Ratio (ttm) Earnings Per Share (SAR) (ttm) 2.12 Market Cap (SAR Million) 53,690 Shares Outstanding (Million) 1,000 Dividend Yield 1.39% 25% 16% 24% 35% Savola HHPrince Sultan bin Mohammed PIF Others 30% 25% 20% 15% 10% return since listing 17% 150% 100% 50% 0% Almarai Tasi 2017 Q4 Earnings Presentation 27

28 For Investor Relations matters please contact: We will encourage our major corporations to expand across borders and take their rightful place in global markets QR Code for Almarai IR App. Thank you

Almarai Company. Interim Results 3 rd Quarter 2018

Almarai Company. Interim Results 3 rd Quarter 2018 Interim Results 3 rd Quarter 2018 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