Varun Beverages Ltd. Q4 & CY2017 Financial Results

Transcription

1 (a PepsiC franchisee) Varun Beverages Ltd. Q4 & CY2017 Financial Results CY2017 EBITDA increases 5% YY t Rs. 8,358 millin EBITDA margins expand 30 bps t 20.9% Net Prfit expands 346% t Rs. 2,141 millin Gurgan, February 16, 2018: Varun Beverages Limited (BSE: , NSE: VBL), a key player in the beverage industry, annunced its financial results fr the furth quarter and year ended December 31, Financial Perfrmance Highlights* Perfrmance Review fr CY2017 vs. CY2016 Revenue frm peratins (net f excise / GST) grew 3.7% YY in CY2017 t Rs. 40,034 millin as cmpared t Rs. 38,612 millin in CY2016 Ttal sales vlume were up 1.1% YY at millin cases in CY2017 as cmpared t millin unit cases in CY2016 EBITDA increased by 5.0% t Rs. 8,358 millin in CY2017 frm Rs. 7,960 millin in CY2016 and EBITDA margins have imprved 30 bps YY t 20.9% PAT expanded 345.6% t Rs. 2,141 millin in CY2017 frm Rs. 480 millin in CY2016 Perfrmance Review fr Q4 CY2017 vs. Q4 CY2016 Revenue frm peratins (net f excise / GST) grew 21.4% YY t Rs. 5,274 millin as cmpared t Rs. 4,342 millin EBITDA std at Rs. 225 millin in Q4 CY2017 as cmpared t Rs. 363 millin in Q4 CY2016 Lss during Q4 CY2017 reduced t Rs. 721 millin frm a lss f Rs. 1,117 millin in Q4 CY2016 *Nte 1: VBL fllws a calendar year f reprting (Jan t Dec); Nte 2: Given the seasnality in the business, it is best t mnitr the business n an annual basis as a significant prtin f the revenues and entire prfits are realized in the Apr- June quarter; Nte 3: VBL has adpted IND-AS framewrk starting Q1 CY2017. Prir perid numbers have been restated in cmpliance with Ind-AS fr a meaningful cmparisn.

2 Cmmenting n the perfrmance fr Q4 & CY2017 Mr. Ravi Jaipuria, Chairman, Varun Beverages Limited said, I am pleased t reprt we have cmpleted ur first year pst listing delivering a rbust perfrmance with net prfit grwing 346% t Rs. 214 crre. This is despite a challenging year with the residual impact f demnetisatin and de-stcking by trade ahead f GST implementatin which impacted vlumes. We have fcused n initiatives where we can drive the utcme and imprve perating parameters t create a mre efficient and sustainable business and can nw take advantage f the imprving external cnditins t accelerate grwth. We have cncluded the acquisitin f PepsiC India s previusly franchised territries f the State f Odisha, parts f Madhya Pradesh, Chhattisgarh, Bihar and underging due-diligence in Jharkhand. These are highly under-penetrated regins and prvide huge pprtunity fr increasing vlumes and gaining market share, and in line with the Cmpany s strategy t expand int cntiguus territries t garner better perating leverage and asset utilizatin thrugh ecnmies f scale. VBL is nw a franchisee fr PepsiC prducts acrss 21 States and 2 Unin Territries and accunts fr ~51% f PepsiC s beverage sales vlumes in India frm ~45% a year ag. We have als undertaken a greenfield expansin in Zimbabwe and cmmercial prductin is expected t cmmence shrtly. This is an untapped market with huge ptential and as the sle franchisee f PepsiC, we are cnfident f replicating the success that we have had in Zambia, in Zimbabwe as well. We remain agile by keeping n tp f new trends and changes in cnsumer preferences, wrking clsely with PepsiC India t adjust ur prduct prtfli and prcesses accrdingly. After the launch f zer calrie Pepsi Black and the energy drink Sting earlier in the year, during the quarter, we entered int a strategic partnership fr selling and distributin f the larger Trpicana prtfli that includes Trpicana Juices (100%, Delight, Essentials), Gatrade in the Sprts drink categry and Quaker Value-Added Dairy in territries acrss Nrth and East India. VBL has prved its resilience against challenges with its successful perfrmance in We are present in gegraphies that ffer great lng term, sustainable grwth pprtunities. Average per capita cnsumptin rates are significantly lwer than glbal averages, in cntrast t the strnger GDP grwth, increasing dispsable incmes and yung demgraphics. S in a nrmalized year, we are cnfident f delivering strng grwth n the back f ur slid business mdel and expanded prduct prtfli. Key Develpments CY2017 Acquisitin f new territries Cncluded the acquisitin f PepsiC India s previusly franchised territries f the State f Odisha and parts f Madhya Pradesh alng with tw manufacturing units at Bargarh (Odisha) and Bhpal (Mandideep, MP) w.e.f. 27 th Sep 2017 Cncluded the acquisitin f PepsiC India s previusly franchised territry f the State f Chhattisgarh w.e.f. 11 th Jan 2018

3 Acquired franchisee rights f PepsiC India s previusly franchised territry f the State f Bihar w.e.f. 17 th Jan 2018 Acquired a manufacturing unit at Cuttack (Odisha) w.e.f. 19 th Jan 2018 Signed BTA fr the acquisitin f PepsiC India s previusly franchised territries f the State f Jharkhand alng with a manufacturing unit at Jamshedpur n 20th Dec 2017 (duediligence prcess nging) Ttal cnsideratin fr abve acquisitins is ~Rs. 2,550 millin and further we expect t spend ~Rs. 350 millin in upgrading the plant & machinery and marketing assets in these territries Abve acquisitins will help in garnering incremental PepsiC India s vlumes f 6% and further prviding access t an additinal cnsumer base f ~21% f India s ppulatin VBL is nw a franchisee fr PepsiC prducts acrss 21 States and 2 Unin Territries in India and accunts fr ~51% f PepsiC s beverage sales vlumes in India New prduct launches Launched Pepsi Black, a zer calrie cla flavr CSD prduct currently available in 250ml cans and 250 ml nn-returnable glass bttles Launch is part f PepsiC s plan t intensify fcus n health and nutritin, reduce sugar cntent in beverages Launched Sting fr the next seasn, a carbnated energy drink available in 250ml cans and 250 ml PET bttles with a highly cmpetitive price pint as cmpared t ther brands in the segment The energy drinks cntains apprx. 50% less sugar than the regular CSD prducts and 70 calries per 250ml serving Entered int a strategic partnership fr selling and distributin f the larger Trpicana prtfli that includes Trpicana Juices (100%, Delight, Essentials) in territries acrss Nrth and East India Entered int a strategic partnership fr selling and distributin f Gatrade and Quaker Value-Added Dairy in territries acrss Nrth and East India Ratings upgrade Cmpany s credit rating fr lng term debt f VBL gt upgraded by ne ntch and shrt term debt rating cntinued t remain at tp ntch Lng Term Debt: CRISIL A+/Psitive t CRISIL AA-/Stable Shrt Term Debt / Cmmercial Paper: CRISIL A1+ Capacity expansin / ratinalizatin

4 Set up a new unit fr manufacturing f Pepsi range f prducts at District Hardi, Uttar Pradesh; cmmercial prductin / peratin started with effect frm May 3, 2017 Ga peratins gt cnslidated int a single larger facility t bring in peratinal efficiencies One CSD glass line each frm Sathariya-1 and Bazpur plant shifted t Nepal and Zimbabwe respectively Shut dwn 4 depts in India as part f ratinalizatin exercise pst GST implementatin Capex fr CY17 is in line with depreciatin and t substantially reduce ging frward Expanded presence in Africa Increased stake in Zambia subsidiary, Varun Beverages (Zambia) Limited, t 90% frm 60% at reasnable valuatins with an attractive payback given grwth prspects and prmising earnings ptential Enables VBL t cnslidate a higher share f prfits frm the subsidiary ging frward (2017 sales vlumes f ~10 millin cases; 2017 EBITDA f Rs. 275 millin and 2017 PAT f Rs. 178 millin) Established a greenfield prductin facility in Zimbabwe, an untapped market with huge ptential, and as PepsiC s sle franchisee will sell and distribute PepsiC s prducts Divestment Divested 41% stake in its Mzambique subsidiary, Varun Beverages Mzambique Limitada in view f limited pprtunity t scale-up peratins t turnarund the lss making subsidiary Subsidiary cntributed nly 0.6% t the net revenues frm peratins in 2016 and recrded a lss f Rs. 135 millin in 2016 ENDS

5 Abut Varun Beverages Limited: Varun Beverages Limited (VBL) is a key player in beverage industry and ne f the largest franchisee f PepsiC in the wrld (utside USA). The Cmpany prduces and distributes a wide range f carbnated sft drinks (CSDs), as well as a large selectin f nn-carbnated beverages (NCBs), including packaged drinking water sld under trademarks wned by PepsiC. PepsiC CSD brands prduced and sld by VBL include Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemn, Muntain Dew, Seven-Up Nimbz Masala Sda, Sting and Evervess. PepsiC NCB brands prduced and sld by the Cmpany include Trpicana Slice, Trpicana Frutz, Trpicana Juices (100%, Delight, Essentials), Nimbz as well as packaged drinking water under the brand Aquafina. VBL has been assciated with PepsiC since the 1990s and have ver tw and half decades cnslidated its business assciatin with PepsiC, increasing the number f licensed territries and sub-territries cvered by the Cmpany, prducing and distributing a wider range f PepsiC beverages, intrducing varius SKUs in the prtfli, and expanding the distributin netwrk. As f December 31, 2017, VBL has been granted franchises fr varius PepsiC prducts acrss 21 States and tw Unin Territries in India. India is the largest market and cntributed 76% f revenues frm peratins (net) in Fiscal VBL has als been granted the franchise fr varius PepsiC prducts fr the territries f Nepal, Sri Lanka, Mrcc, Zambia and Zimbabwe. Fr further infrmatin, please cntact: Raj Gandhi / Deepak Dabas Varun Beverages Ltd Tel: raj.gandhi@rjcrp.in / deepak.dabas@rjcrp.in Anp Pjari / Varun Divadkar CDR India Tel: / anp@cdr-india.cm / varun@cdrindia.cm Safe Harbr Certain statements in this cmmunicatin may be frward lking statements within the meaning f applicable laws and regulatins. These frward-lking statements invlve a number f risks, uncertainties and ther factrs that culd cause actual results t differ materially frm thse suggested by the frward-lking statements. Imprtant develpments that culd affect the Cmpany s peratins include changes in the industry structure, significant changes in plitical and ecnmic envirnment in India and verseas, tax laws, imprt duties, litigatin and labur relatins. Varun Beverages Ltd (VBL) will nt be in any way respnsible fr any actin taken based n such statements and undertakes n bligatin t publicly update these frward-lking statements t reflect subsequent events r circumstances.