Analyst presentation annual results 2017/18 7 June 2018

Transcription

1 Analyst presentation annual results 2017/18 7 June 2018

2 Disclaimer DISCLAIMER THIS PRESENTATION may contain forward looking statements. These statements are based on current expectations, estimates and projections of Lucas Bols management and information currently available to the company. Lucas Bols cautions that such statements contain elements of risk and uncertainties that are difficult to predict and that could cause actual performance and position to differ materially from these statements. Lucas Bols disclaims any obligation to update or revise any statements made in this presentation to reflect subsequent events or circumstances, except as required by law. Certain figures in this presentation, including financial data, have been rounded. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an exact arithmetic aggregation of the figures which precede them. 2

3 FY 2017/18 1. Lucas Bols at a glance 2. Highlights 3. Operational highlights 4. Financials 5. Outlook 3

4 Lucas Bols at a glance: Revenue +15%, EBIT +30% 13.4% 18.5% 20.0% 46.7% 22.7% 19.9% Revenue m EBIT* m 4

5 Strong offering of global brands and regional brands Global brands Bols Liqueurs range Revenue split 2017/18 24% Regional brands 22.3 mln. Regional brands Liqueurs 76% 29,8% White Spirits Italian Liqueurs 70,2% Global brands 69.9 mln. Dutch Jenever portfolio Gross Profit split 2017/18 Regional brands 10.2 mln. Passoã 18% Value brands 82% Global brands 46.9 mln. 5

6 Sold in more than 110 countries around the world Group revenue per geographical segment based on FY 2017/18 6

7 Lucas Bols mission & strategic framework Mission Lucas Bols We create great cocktail experiences around the world. Strategic framework Lucas Bols Build the brand equity Lead the development of the cocktail market Accelerate global brand growth Leverage operational excellence To strengthen and grow our global brands in the international cocktail market To maintain the competitiveness of our regional brands in regional and local markets 7

8 FY 2017/18 1. Lucas Bols at a glance 2. Highlights 3. Operational highlights 4. Financials 5. Outlook 8

9 Highlights FY 2017/18 Revenue Revenue of 92.2 million, an increase of 14.5% compared to last year, driven by the full year consolidation of Passoã (+1.8% organically) Brand performance Global brands reported 21.0% higher revenue, with organic growth of 3.3%, while the regional brands reported revenue was down 1.8% Regional performance Western Europe reported 27.8% growth in revenue, mainly on the back of Passoã and North America showed growth of 3.1%. Emerging Markets reported revenue was up 5.1% and Asia-Pacific returned to growth with a 1.3% rise in revenue. The US market showed strong organic revenue growth of 11.5% Gross margin Gross profit increased 18.0% and gross margin was up 190 bps to 62.0%, attributable both to Passoã and to margin growth of the global brands EBIT EBIT increased 29.6% to 23.6 million at an EBIT margin of 25.6% Net Profit Dividend Normalised net profit increased 20.1% to 14.7 million compared to normalised net profit of 12.3 million in 2016/17. Reported net profit of 20.4 million, includes a one-off tax benefit of 5.6 million in 2017/18 Proposed final dividend of 0.25 per share, putting total full-year dividend at 0.60 per share, up 5.3% compared to 2016/17 9

10 FY 2017/18 1. Lucas Bols at a glance 2. Highlights 3. Operational highlights 4. Financials 5. Outlook 10

11 Operational highlights FY 2017/18 Bols Liqueurs: low single digit revenue growth Two new flavours developed and introduced, Cucumber and Ginger Good performance in retail markets Germany and UK Retail position US significantly strengthened by two large retail chain listings in the last quarter Introduction of three new flavours in the US in March 2018 New low alcohol drink strategy with Low Bols concept launched Bols Genever and Damrak Gin: double digit revenue growth Bols Genever new brand identity and drink strategy finalized Damrak Gin recorded strong growth in the US and the Netherlands Bols Vodka is still experiencing pressure in Canada due to fierce price competition, while in its main markets such as Argentina and the Netherlands the brand continues to perform well 11

12 Operational highlights FY 2017/18 - continued Italian Liqueurs performed in line with last year Further roll-out of the Galliano range in the US New range extensions of Galliano in various new markets Revival of the Galliano Hot Shot in Sweden supported by events and brand activations New brand identity Vaccari well received in key markets The Passoã brand performed well, in line with expectations First full year of inclusion in the global brands portfolio of Lucas Bols Strong growth in the UK on the back of the Porn Star Martini cocktail Also strong performance in the Netherlands and Switzerland Expansion to 35 states in the US 12

13 Bols Genever Double digit revenue growth driven by the US and the Netherlands New brand identity and drink strategy takes Bols Genever to the next level as the original spirit of Amsterdam Bols Genever 100% Malt Spirit launched in September 2017 in various markets, including the US Red Light Negroni signature drink Bols Genever Ambassadors promoting Bols Genever in key cities around the world Bols Genever Barrel Aged introduced in the Netherlands 13

14 Passoã is clearly delivering on its promise Passoã is successfully integrated into the Lucas Bols organisation The commercial organisation has taken over all distribution contracts, and new agreements with distribution partners were signed Lucas Bols USA took over the distribution of Passoã from Rémy Cointreau and expanded the distribution from 15 states to 35 states at the end of March 2018 Strong new visual identity and campaign were developed and implemented New fresh campaign activated in retail markets, including France and Belgium Porn Star Martini cocktail a continued success in the UK, also launched in other markets such as the US and the Netherlands Passoã was launched in a number of African countries and in Eastern Europe in H2 2017/18, further expansion is planned for 2018/19 14

15 Lucas Bols USA Strong organic revenue growth of 11.5% Bols Liqueurs Range three new flavours added; Pineapple Chipotle, Mango and Ginger Significantly strengthened the retail position of Bols Liqueurs with new listings in two large retail chains Damrak gin - official gin of Delta Sky clubs as of 1 July 2017 Nuvo was reintroduced in the US in the spring of 2018 by our own organisation. 15

16 Awards in the USA Wine & Spirits Wholesalers of America (WSWA) 2018 Best Liqueur of show & Double gold Wine & Spirits Wholesalers of America (WSWA) 2018 Best Genever of show & Double gold 16

17 Nuvo In December 2017 Lucas Bols signed an agreement regarding a strategic partnership for the sparkling liqueur brand Nuvo Created in 2007, Nuvo is made of vodka, sparkling wine and a blend of fruit nectars. The brand is primarily consumed by women and is mostly sold in the retail The transaction fits within our asset-light business model as it strengthens the company s existing distribution platform with limited additional overheads required In the spring of 2018 Nuvo is reintroduced in the US in 10 selected states by Lucas Bols USA Nuvo will be supported by strong retail activation programs 17

18 Regional brands Lucas Bols maintained its strong market-leading position in the Dutch genever and vieux segment In Western Africa distribution of Henkes Gin and Henkes Whisky was expanded The distribution network in Southern Africa was further strengthened resulting in good growth on the back of a solid performance by Bols Brandy Positive developments offset by significantly lower sales of concentrates in the Southern part of Africa due to a regulatory change and a weaker performance of our regional liqueurs Kontiki Sour Spiritz was introduced in the Netherlands in January

19 FY 2017/18 1. Lucas Bols at a glance 2. Highlights 3. Operational highlights 4. Financials 5. Outlook 19

20 Strong revenue and EBIT growth Reported (in million) FY 2017/18 FY 2016/17 Reported growth Organic growth* Highlights Revenue % 1.8% Cost of sales % 0.0% GROSS PROFIT % 3.1% Gross margin % 62.0% 60.1% ## 200.1% D&A expenses % OPERATING PROFIT % 43.1% Operating margin % 24.5% 19.9% ## 460.1% Share of profit of JVs, net of tax % EBIT % 36.6% EBIT margin % 25.6% 22.7% ## 464.4% Finance costs % PROFIT BEFORE TAX % Income tax expense % PROFIT FOR THE PERIOD % Revenue increase of 14.5% compared to last year (+1.8% organically) driven by Passoã Gross margin was up 190bps attributable to Passoã and margin growth of the global brands A&P as a percentage of revenue amounted to 16.6%, as we continue to invest in global brands that show strong growth potential in various strategic markets EBIT increased 29.6% to 23.6 million with the EBIT margin coming in at 25.6% Income taxes included one-off tax benefits in both years, 5.6 million in 2017/18 and 3.2 million in 2016/17 Normalised net profit increased 20.1% to 14.7 million (EPS of 1.18) compared to normalised net profit of 12.3 million in 2016/17 (EPS of 0.98) Earnings per share % * at constant currencies, excluding one-off items and the first eight months of Passoã in 2017/18 20

21 Global brands Reported (in million) FY 2017/18 FY 2016/17 Reported growth Organic growth* Highlights Revenue % 3.3% Cost of sales % -3.6% GROSS PROFIT % 7.2% Gross margin % 67.1% 64.1% D&A expenses % 9.5% % of revenues -25.3% -25.3% OPERATING PROFIT % 5.6% Operating margin % 41.8% 38.8% Share of profit of JVs, net of tax EBIT % 6.1% EBIT margin % 42.2% 39.8% * at constant currencies, excluding one-off items and the first eight months of Passoã in 2017/18 Reported growth of the global brands is mainly attributable to the addition of the Passoã brand. Organically the global brands were up 3.3% Gross margin rose significantly by 300 bps to 67.1% (2016/17: 64.1%) due to both the positive impact of Passoã and to margin growth of the other global brands EBIT increased 28.3%, resulting in an EBIT margin of 42.2% EBIT development (in m) +28.3% FY 2016/17 Badwill FY 2016/17 Δ Global brands Δ Foreign exchange effect FY 2017/18 21

22 Regional brands Highlights Reported (in million) FY 2017/18 FY 2016/17 Reported growth Organic growth* Revenue slightly down compared to last year Revenue % -2.0% Cost of sales % 6.4% GROSS PROFIT % -10.4% Gross margin % 45.9% 50.1% ## D&A expenses % 0.7% % of revenues -9.1% -8.9% ## OPERATING PROFIT % -12.8% Operating margin % 36.8% 41.1% Share of profit of JVs, net of tax EBIT % -11.7% EBIT margin % 40.2% 48.4% ## The gross margin decreased by 430 bps, on an organic basis, mainly as a result of lower concentrates sales in the Southern part of Africa EBIT decreased 18.5%, explained by lower gross margin as well as the effect of the one-off gain of 0.9 million in FY 2016/17 EBIT margin is at 40.2% EBIT development (in m) * at constant currencies and excluding one-off items -18.5% FY 2016/17 Badwill FY 2016/17 Δ Regional brands Δ Foreign exchange effect FY 2017/18 22

23 Global brands driving revenue growth Revenue development (in million) +14.5% -0.5 Group revenue structure (FY 2017/18) Regional brands % % Global brands FY 2016/ % Δ Global brands 67.1% Δ Regional brands 45.9% Δ Foreign exchange effect FY 2017/ % Revenue (* m) Reported FY 2017/18 Reported growth % Organic growth % Global brands % 3.3% Regional brands % -2.0% Total % 1.8% Reported gross margin 23

24 Revenue by region Revenue development at constant currencies (in million) % Western Europe reported 27.8% growth, mainly as a result of the addition of Passoã Western Europe Revenue* 10.7 Global brands achieved good growth in the Netherlands and the UK 80.5 The strong market share of the regional brands in the Dutch domestic market was maintained 52.1% FY 2016/17 Δ Western Europe Δ Asia - Pacific Δ North America Δ Emerging Markets Δ Foreign Exchange Impact FY 2017/18 Asia-Pacific Revenue (in million) Reported FY 2017/18 Reported FY 2016/17 Reported growth % Organic growth % Asia-Pacific reported 1.3% growth for the full year after posting a slight decline in revenue in H1 Revenue* Western Europe % 1.4% Asia - Pacific % -4.9% North America % 7.0% Emerging Markets % 5.6% Total % # 1.8% Passoã contributed to the growth, mainly in Japan Organic revenue was slightly down mainly as a result of still challenging circumstances in Indonesia 17.6% *) based on FY 2017/18 revenue 24

25 Revenue by region Revenue development at constant currencies (in million) % In North America the growth path continued with 7.0% organic growth US reported strong organic growth of 11.5% driven by growth for Bols Liqueurs, Bols Genever and Damrak Gin as well as pricing adjustments North America Revenue* 80.5 Retail position Bols Liqueurs was strengthened In Canada heavy price competition resulted in lower revenue of Vodka, whereas sales of Passoã in Puerto Rico were impacted by the hurricanes 18.0% FY 2016/17 Revenue (in million) Δ Western Europe Δ Asia - Pacific Δ North America Reported FY 2017/18 Δ Emerging Markets Reported FY 2016/17 Δ Foreign Exchange Impact FY 2017/18 Reported growth % Organic growth % Western Europe % 1.4% Asia - Pacific % -4.9% North America % 7.0% Emerging Markets % 5.6% Total % # 1.8% Emerging Markets region achieved good growth of 5.1%, attributable to the strong performance of Eastern Europe (mainly Russia) New markets, including the Caucasus, also showed good growth The Caribbean was impacted by the hurricanes and revenue in Central America declined In the Southern part of Africa significantly lower sales of concentrates were recorded Emerging Markets Revenue* 12.3% *) based on FY 2017/18 revenue 25

26 Gross profit margin increased by 190bps to 62.0% Gross profit development (in million) +18.0% Gross margin development (organic) 0.2 Total 70bps 8.1 Western Europe 160bps 48.4 Asia - Pacific North America Emerging Markets 10bps 340bps -430bps FY 2016/17 Δ Western Europe Δ Asia - Pacific Δ North America Δ Emerging Markets Δ Foreign Exchange Impact FY 2017/ % 58.0% 74.3% 59.8% 64.2% 62.0% Reported gross margin 26

27 EBIT up 29.6%, driven by growth of global brands EBIT development (in million) Highlights EBIT for the full year 2017/18 came in at 23.6 million (2016/17: 18.2 million) Currency effects had a limited 30.6% negative impact of 0.5 million on EBIT as the 69.4% company was still benefiting from favourable hedging contracts As a result of the addition of Passoã, total overhead as a percentage of revenue decreased from 16.5% to 15.5% The EBIT margin rose by 290 bps from 22.7% last year to 25.6% in 2017/18 FY 2016/ % Badwill & transaction costs FY 2016/17 excl. One-offs 23.4% Δ Global brands Δ Regional brands Δ Unallocated Δ Foreign exchange effect FY 2017/ % Reported EBIT margin 27

28 Taxation Reported (in million) FY 2017/18 FY 2016/17 Reported growth Organic growth* Highlights Revenue % 1.8% Cost of sales % 0.0% GROSS PROFIT % 3.1% Gross margin % 62.0% 60.1% ## 200.1% D&A expenses % OPERATING PROFIT % 43.1% Operating margin % 24.5% 19.9% ## 460.1% Share of profit of JVs, net of tax % EBIT % 36.6% EBIT margin % 25.6% 22.7% ## 464.4% Income taxes included one-off tax benefits in both years, 5.6 million in 2017/18 and 3.2 million in 2016/17 The one-off in 2017/18 is mainly due to the positive impact on the company s deferred tax liabilities of upcoming reductions in the French corporate tax rate Excluding the one-offs, the effective tax rate increased to 26.5% (last year 23%) as a result of incorporation of Passoa and lower share of profit of JV's Finance costs % PROFIT BEFORE TAX % Income tax expense % PROFIT FOR THE PERIOD % Earnings per share % * at constant currencies, excluding one-off items and the first eight months of Passoã in 2017/18 28

29 Normalised net profit was up 20.1% to 14.7 million Reported (in million) FY 2017/18 FY 2016/17 Reported growth Organic growth* Highlights Revenue % 1.8% Cost of sales % 0.0% Earnings per share of 1.64 GROSS PROFIT % 3.1% Gross margin % 62.0% 60.1% ## 200.1% Dividend of 0.60 per share, up 5.3% D&A expenses % OPERATING PROFIT % 43.1% Operating margin % 24.5% 19.9% ## 460.1% Number of shares outstanding are 12,477,298 Share of profit of JVs, net of tax % EBIT % 36.6% EBIT margin % 25.6% 22.7% ## 464.4% Finance costs % Normalised net profit increased 20.1% to 14.7 million (EPS of 1.18) compared to normalised net profit of 12.3 million in 2016/17 (EPS of 0.98) PROFIT BEFORE TAX % Income tax expense % PROFIT FOR THE PERIOD % Earnings per share % * at constant currencies, excluding one-off items and Passoã 29

30 Balance sheet ASSETS (in million) FY 2017/18 FY 2016/17 Intangible assets Investments in joint ventures Other NON-CURRENT ASSETS Cash and cash equivalents Net working capital Other TOTAL Funded by FY 2017/18 FY 2016/17 LIABILITIES & EQUITY (in million) Loans and borrowings Deferred tax liabilities Other NON-CURRENT LIABILITIES Loans and borrowings Derivative financial instruments CURRENT LIABILITIES Highlights Net working capital 14.4 million, higher due to higher inventory and higher payables end of last year, following inclusion of Passoã Other non-current liabilities include an assumed debt of 68.2 million representing the call/put option related to Passoã The net debt to EBITDA ratio is 2.8 (the net debt to EBITDA ratio including the assumed debt was 4.3 at 31 March 2018) Deferred tax Deferred tax FY 2017/18 FY 2016/17 (in million) Deferred tax assets Deferred tax liabilities (48.4) (54.5) Total (43.1) (46.5) The decrease in DTL is mainly the result of upcoming reductions in the French corporate tax rate EQUITY TOTAL

31 Continued strong cash flows as a result of our assetlight model Cash flow development (in million) Highlights Cash flows were used to pay dividends ( 7.6 million), and reduce the net debt position (down 8 million) as well as pay interest % Operating profit FY 2017/18 Depreciation CAPEX Income taxes Working capital Dividends from JV FOCF FY 2017/18 FOCF FY 2016/17 31

32 Important aspects of Lucas Bols currency effects USD exchange rate JPY exchange rate Highlights 49.7% of revenue is denominated in foreign currencies in 2017/18 (compared to 50.9% in 2016/17) Lucas Bols has a policy of hedging 60-80% of its net cashflows in foreign currencies at the start of the financial year In 2017/18, as a result of the stronger euro, foreign currencies had a negative impact of 1.6 million on revenue and 0.5 million on EBIT AUD exchange rate GBP exchange rate Taking into account the foreign currency positions already hedged and assuming the current level of the euro, all foreign currencies combined are expected to have a negative impact of around 1.2 million on EBIT in 2018/19 vs. the 2017/18 rates EBIT exchange rates 2018/19 outlook EUR/USD 1.21 EUR/JPY EUR/AUD 1.56 EUR/GBP

33 IFRS 15 and 16 update Reported (in million) IFRS 15 FY 2017/18 FY 2016/17 impact Reported growth Organic growth* Revenue % 1.8% Cost of sales % 0.0% GROSS PROFIT % 3.1% Gross margin % 62.0% 60.1% ## 200.1% D&A expenses % OPERATING PROFIT % 43.1% Operating margin % 24.5% 19.9% ## 460.1% Share of profit of JVs, net of tax % EBIT % 36.6% EBIT margin % 25.6% 22.7% ## 464.4% Finance costs % PROFIT BEFORE TAX % Income tax expense % PROFIT FOR THE PERIOD % IFRS 15 update Lucas Bols has completed an initial assessment of the potential impact of the adoption of the new revenue recognition standard IFRS15 Revenue from Contracts with Customers IFRS 15 is expected to primarily trigger the reclassification of certain advertising and promotional expenses as reduction of revenue, with an estimated mid-single digit percentage impact on revenue Overall we currently do not expect any material effect on the presentation of the company s financial position, results of operations as a whole, or earnings per share IFRS16 replaces existing guidance on lessee accounting for leases. The most significant impact identified is that the company will recognise assets and liabilities for its operating leases of real estate Earnings per share % 33

34 FY 2017/18 1. Lucas Bols at a glance 2. Highlights 3. Operational highlights 4. Financials 5. Outlook 34

35 Outlook The underlying market dynamics in the global cocktail market remain healthy. We continue to believe in the potential of our global brands in all four regions around the world and focus on further growing our global brands, in line with our strategy. We continue to invest in A&P for global brands that show strong growth potential in various strategic markets. Lucas Bols has a hedging policy in place. Taking into account the foreign currency position already hedged and assuming the current level of the euro, foreign currencies are expected to have a negative impact of around 1.2 million on EBIT in 2018/19 vs the 2017/18 financial year. Lucas Bols USA relaunched the Nuvo brand in the spring of 2018, which will contribute to the revenue growth of the global brands in the US. Given the initially higher A&P investments behind Nuvo and the royalty payments, the contribution to EBIT will be limited while the impact on Lucas Bols s earnings per share is expected to be neutral to slightly positive in the short term. We will continue to monitor potential add-ons of brands which can be integrated into our platform. 35

36 Q&A