INVESTOR PRESENTATION FULL YEAR 2018

Transcription

1 INVESTOR PRESENTATION FULL YEAR MARCH 2019

2 AGENDA 1. Highlights 2. Fuelling the Growth 3. Our categories 4. Financials 5. Financial ambitions and guidance Q&A This presentation contains forward-looking statements. All statements other than statements of historical fact included in the presentation are forward-looking statements. Forward-looking statements give Scandinavian Tobacco Groups ( STG ) current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the Information or the opinions contained therein. The presentation has not been independently verified and will not be updated. 2

3 HIGHLIGHTS FY2018 Delivered on Guidance Fuelling the Growth ~DKK 250 million in net savings FY2019 >5% organic EBITDA growth 3

4 Q4 AND FY 2018 FINANCIAL HIGHLIGHTS Q FY 2018 Net sales DKK 1,765 million (organic growth -4.4%) DKK 6,718 million (organic growth 0.4%) EBITDA before special items (previously Adjusted EBITDA) DKK 362 million (organic growth 10.2%) DKK 1,304 million (organic growth 3.5%) Free cash flow bef. acquisitions DKK 204 million DKK 668 million Dividend per share DKK 6.00 (DKK 5.75) proposed 4

5 FUELLING THE GROWTH GROUP WIDE TRANSFORMATION Simplified organisation and efficient operating model Execution of strategic agenda and drive internal collaboration Build strength to cope with changing market conditions Prepare for integration of future acquisitions

6 FUELLING THE GROWTH OPERATIONAL INITIATIVES AND FINANCIAL IMPACT ORGANISATION FTE/net sales ratio Organisational layers from 10 to white collar positions COMMERCIAL RESOURCES Four divisions anchored in Executive Board Customer service level Market shares in selected markets Number of active customers in online/catalogue business GLOBAL LOGISTICS Manufacturing network Production allocation across factories Distribution efficiency and improve customer service GLOBAL PROCUREMENT A global procurement organisation Group purchases of DKK 4 billion The number of suppliers OPERATIONAL COST EFFIENCY Product platforms SKU portfolio Capacity utilisation SPECIAL COSTS 250M FTG NET SAVINGS 250M SPECIAL COSTS OF UP TO DKK 250 MILLION. (DKK 182 MILLION IN 2018) FULL-YEAR RUNRATE NET SAVINGS OF ~DKK 250 MILLION BY THE END OF

7 . HANDMADE CIGARS NO. 1 IN THE US 7

8 HANDMADE CIGARS DKK million Q4 17 Q4 18 Net sales 1,935 2,067 1,921 2, Growth 27.9% 6.8% -7.1% 23.7% 32.1% Gross profit Gross margin 43.6% 43.7% 41.4% 41.4% 38.4% 41.1% FY AND Q General Cigar: Record year with increase in net sales and profits and strong focus on the brand portfolio Volume impact 6.6% 7.4% -1.8% 1.6% -4.8% Price/mix impact 1.3% -0.2% -2.3% 4.0% 5.7% Organic growth 1) 7.9% 7.2% -4.0% 5.6% 0.9% 1) Excluding impact of currencies, acquisitions and special items Reclassification improves Q margins from 38.4% to 38.5% Cigars International: Good organic growth for full year which softened in fourth quarter Thompson Cigars: Earlier than expected EBITDA contribution with full integration expected by end of Gross margin: Unchanged for 2018 and increase in Q4 despite dilution from Thompson

9 .avv MACHINE-MADE CIGARS NO. 1 IN THE EU, AUSTRALIA AND CANADA 9

10 MACHINE-MADE CIGARS DKK million Q4 17 Q4 18 Net sales 2,702 2,593 2,491 2, Growth 4.2% -4.0% -3.9% -5.0% -7.9% Gross profit 1,372 1,280 1,268 1, Gross margin 50.8% 49.3% 50.9% 51.4% 54.0% 46.0% - bef. special items 52.2% 52.6% 52.4% 52.2% 53.4% 49.1% Volume impact -5.7% -6.0% -3.7% -5.2% -9.4% Price/mix impact 3.4% 2.2% 1.3% 1.8% 0.5% Organic growth 1) -2.3% -3.9% -2.4% -3.4% -9.0% 1) Excluding impact of currencies, acquisitions and special items Reclassification improves Q margins from 53.4% to 55.3% FY AND Q Organic net sales improved for most of the year but had a disappointing finish in Q4 The overall market share in our key markets was down, but good progress in UK, Belgium and Spain Q4 was impacted by a weak development in France Gross margin before special items was down 10

11 . PIPE TOBACCO NO. 1 GLOBALLY 11

12 PIPE TOBACCO DKK million Q4 17 Q4 18 Net sales Growth 10.6% -9.5% -4.4% -12.1% -4.3% Gross profit Gross margin 60.1% 60.8% 59.9% 59.5% 58.0% 59.4% - bef. special items 60.1% 61.2% 60.1% 59.5% 58.0% 59.4% Volume impact -5.1% -10.6% -2.3% -12.9% -17.2% Price/mix impact 6.7% 1.7% -0.3% 6.2% 14.9% Organic growth 1) 1.6% -8.9% -2.6% -6.7% -2.3% 1) Excluding impact of currencies, acquisitions and special items Reclassification improves Q margins from 58.0% to 60.3% FY AND Q Poor performance in the category driven by weak volumes Lower shipments to Middle East, Africa and Asia Small bolt-on acquisition of Peterson Pipe Tobacco Gross margins: Positive mix impact could not compensate for negative volume impact 12

13 . FINE-CUT TOBACCO NO. 1 IN THE US AND DENMARK 13

14 FINE-CUT TOBACCO DKK million Q4 17 Q4 18 Net sales Growth 3.9% 11.8% -8.3% -6.1% -2.9% Gross profit Gross margin 58.5% 57.9% 60.9% 59.1% 62.7% 61.4% -bef. special items 58.5% 58.3% 61.1% 59.1% 62.7% 61.4% FY AND Q Strong volume decline driven by Norway Shipments to Norway impacted by introduction of plain packaging Volume impact -6.0% 7.1% -14.0% -6.6% -5.3% Price/mix impact 4.7% 6.2% 7.0% 4.2% 4.6% Organic growth 1) -1.3% 13.3% -7.0% -2.4% -0.7% 1) Excluding impact of currencies, acquisitions and special items Reclassification improves Q margins from 62.7% to 64.6% Good volume growth in Israel and the German/Danish border trade. Gross margin negatively impacted by changes in geograhical mix 14

15 . ACCESSORIES AND CONTRACT MANUFACTURING POSITIVE GROWTH 15

16 ACCESSORIES AND CONTRACT MANUFACTURING DKK million Q4 17 Q4 18 Net sales Growth -1.0% -2.0% 5.2% 2.9% -5.4% Gross profit Gross margin 34.5% 36.8% 37.6% 41.1% 36.3% 43.8% Volume impact n/a n/a n/a n/a n/a Price/mix impact n/a n/a n/a n/a n/a FY AND Q Organic growth for 2018 was broad-based by segments Strong gross margin improvement driven by contract pruning, better pricing and mix changes. Organic growth 1) -4.5% -3.6% 6.4% 3.5% -7.9% 1) Excluding impact of currencies, acquisitions and special items Reclassification improves Q margins from 36.3% to 36.8% 16

17 KEY DATA FY 2018 FY 2017 DKKm DKKm Growth, % Organic 1 Net sales 6,718 6,464 4% 0.4% Gross profit 3,201 3,095 3% Gross profit before special items 3,219 3,134 3% OPEX (ex other income) -2,112-1,877 13% EBITDA 1,089 1,232 (12%) EBITDA before special items 1,304 1,283 2% 3.5% EBIT (19%) Pre tax Profit (16%) Net profit (6%) 17 1) Excluding impact of currencies, acquisitions and before special items

18 CASH FLOW DEVELOPMENT FY 2018 FY 2017 DKKm DKKm EBITDA 1,089 1,232 Changes in working capital Adjustments Special items, paid Cash flow from operating activities before financial items 1,019 1,256 Financial items, net Tax payments Cash flow from operating activities 784 1,049 Acquisitions Investment in intangible and tangible assets Sale of property, plant and equipment 1 16 Dividend from associated companies 7 7 Cash flow from investing activities Free cash flow Free cash flow before acquisitions

19 19 CAPITAL STRUCTURE AND DIVIDENDS

20 FINANCIAL AMBITIONS EBITDA AVERAGE ANNUAL ORGANIC GROWTH OF 3-5% FREE CASH FLOW BEFORE ACQUISITIONS AND RESTRUCTURING AVERAGE ANNUAL GROWTH (2018: DKK 668 MILLION) ORDINARY DIVIDENDS ANNUAL GROWTH (2018: PROPOSED DKK 6.00 PER SHARE) EXCESS CAPITAL TO BE DISTRIBUTED TO SHAREHOLDERS (TARGET LEVERAGE AT 2.5X) 20

21 GUIDANCE 2019 GUIDANCE EBITDA Organic growth >5% FREE CASH FLOW BEFORE ACQUISITIONS >DKK 750 million ASSUMPTIONS NET SALES FINANCIAL EXPENSES 1) EFFECTIVE TAX RATE SPECIAL ITEMS, NET EXCHANGE RATES 1) Finincial expenses, excluding currency losses or gains SLIGHTLY INCREASING DKK million 21-23% ~DKK -85 million ~USD/DKK

22 22 Q&A

23 INVESTOR RELATIONS CONTACT FINANCIAL CALENDAR Scandinavian Tobacco Group A/S Sydmarken Søborg Denmark MAR APR MAY Annual report 2018* Annual General Meeting First quarter 2019* Torben Sand Head of Investor Relations Tel: AUG NOV Half year report 2019* Nine months 2019* * Silent period starts four weeks prior to interim report announcements 23

24 MARKET SHARE PERFORMANCE Top 5 EU Markets: France, Belgium, Holland, UK and Spain (almost 75% of MMC category) 24

25 BALANCE SHEET DKKm DKKm Goodwill 4,562 4,256 Trademarks 2,923 3,014 IT software Other intangible assets Total intangible assets 7,869 7,551 Property, plant and equipment 1,220 1,217 Total other non-current assets Total non-current assets 9,375 9,013 Inventories 2,599 2,421 Other receivables 1, Cash and cash equivalents Total current assets 4,028 3,978 Total assets 13,403 12, Equity 8,818 8,448 Bank loans 2,658 2,606 Other non-current liabilities Total non-current liabilities 3,476 3,472 Trade creditors Other liabilities Total current liabilities 1,109 1,071 Total equity and liabilities 13,403 12,990

26 FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements. All statements other than statements of historical fact included in the presentation are forward-looking statements. Forward-looking statements give Scandinavian Tobacco Groups ( STG ) current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as target, believe, expect, aim, intend, may, anticipate, estimate, plan, project, will, can have, likely, should, would, could and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond STG s control that could cause STG s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding STG s present and future business strategies and the environment in which it will operate in the future. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the Information or the opinions contained therein. The presentation has not been independently verified and will not be updated. The Information, including but not limited to forward-looking statements, applies only as of the date of this document and is not intended to give any assurances as to future results. STG expressly disclaims any obligation or undertaking to disseminate any updates or revisions to the Information, including any financial data or forward-looking statements, and will not publicly release any revisions it may make to the Information that may result from any change in STG s expectations, any change in events, conditions or circumstances on which these forward-looking statements are based, or other events or circumstances arising after the date of this document. Market data used in the Information not attributed to a specific source are estimates of STG and have not been independently verified. 26