FULL YEAR RESULTS PRESENTATION 2014

Transcription

1 FULL YEAR RESULTS PRESENTATION 2014 Russel Creedy Grant Ellis CEO CFO

2 PRESENTATION OUTLINE Highlights Results Overview KFC Pizza Hut Starbucks Coffee Carl s Jr. Outlook

3 HIGHLIGHTS Commentary Group Revenues up +5.6% NPAT (excluding non-trading) +6.8% Reported NPAT +23.5% on nontrading gains Brand EBITDA +$2.0m with strong performance by Pizza Hut Fully imputed 10.0cps final dividend brings full year +3.1% Carl s Jr. brand building momentum FY12 FY13 FY14 $308.9m $312.8m $330.4m $18.4m $17.7m $18.9m $16.9m $16.2m $20.0m $51.4m $51.5m $53.5m 16.0cps 16.0cps 16.5cps - 2 stores 8 Stores

4 RESULTS OVERVIEW

5 Consolidated NPAT was $18.9m (up 6.8%) on prior year $m FY12 FY13 FY14 % Δ Revenue Gross Margin Distribution (3.1) (2.7) (2.4) 7.8 Marketing (15.1) (13.7) (14.7) (6.9) G&A (11.3) (13.2) (13.1) 0.9 EBIT Non-trading (2.3) (2.4) Interest (1.3) (0.8) (0.8) 9.9 NPBT Tax 6.2 (5.7) (7.5) (30.0) NPAT NPAT (excl non-trading)

6 Total sales up $17.4m driven primarily by Carl s Jr. Same store sales up 2.4% Sales $m FY13 FY14 Total Sales Same Store Sales $ Δ % Δ % Δ KFC Pizza Hut Starbucks Coffee (0.1) (0.3) 5.7 Carl's Jr (60.0) TOTAL SALES

7 Brand EBITDA also up. Slight softening in KFC margins more than offset by solid improvements in other three brands EBITDA $m FY12 FY13 FY14 FY14 vs. FY13 $ Δ % Δ KFC (0.7) (1.6) Pizza Hut Starbucks Coffee Carl's Jr. - (0.5) N/A TOTAL

8 G&A costs have stabilised at targeted 4% of sales 4.2% G&A % 4.0% 3.7% Sales $11.3m $13.2m $13.1m G&A Costs FY12 FY13 FY14

9 Non-trading items a $3.9m turnaround on prior year from sale and leasebacks and goodwill write offs Non-trading items ($m) FY13 FY14 Pizza Hut store sales (2.5) (1.1) Pizza Hut Store book value disposal Gain on disposal (1.5) (0.7) Pizza Hut goodwill write off Store closure costs KFC transformation write offs 0.5 (0.1) Gain on sale and leaseback of stores - (1.8) Insurance proceeds (Christchurch Mat Damage) (1.3) (1.5)

10 Strong operating cash flows and positive investing cash flows meant debt levels reduced Cash flow $m FY11 FY12 FY13 FY14 Operating Cashflow Investing Cashflow (20.4) (14.3) (19.8) (10.1) Free Cashflow Debt (Year End) $15.0m $10.0m $12.2m $13.6m $14.6m $5.0m $8.1m $0.0m FY11 FY12 FY13 FY14

11 Balance sheet remains strong and ratios conservative ($m) FY13 FY14 Commentary Property, plant and equipment PH store sales and sale and leaseback Goodwill Write off on PH store sales Other intangibles 8 10 Software and franchise fees Non-current assets Current assets 5 6 Total Assets Shareholders Equity Increase in retained earnings Not-current Liabilities 20 5 Debt reclassified to current Current Liabilities Total Liabilities FY13 FY14 Interest Cover 30x 35x Net Debt : EBIT 0.6:1 0.3:1 Gearing (D:D+E) 19% 11%

12 Dividend up 3.1% commensurate with profitability FY12 FY13 FY14 cents cents cents Earnings per share (excl non-trading) cps Total dividend dps 16.0* 16.0** 16.5*** Payout ratio of NPAT (excl non-trading) 85% 89% 85% * Fully imputed at 30% ** Imputed at 28% (final) and 29% blended (interim) *** Imputed at 28%

13 KFC OPERATIONS $m FY14 $ Δ % Δ FY13/14 FY13/14 Sales EBITDA 44.5 (0.7) (1.6) EBIT* 31.1 (1.0) (3.1) Assets Employed 64.0 (10.3) (13.9) *Excluding non-trading Sales up 1.9%, but earnings down in soft retail environment with competitive discounting Slower transformation year and sale and leasebacks saw assets employed down New store opened at Auckland Airport

14 Market place pressures meant KFC struggled to deliver on strategies for the current year Strategy Mark Outcome Maintain positive SSS growth (NPD, operational excellence) Return EBITDA margin to >20% through supply chain opportunities, loss prevention and continued operations improvements Evaluate next phase of transformation and roll out further pilot X SSS +0.2% in competitive market. Strong Q4 Value strategy meant margin pressure but margin improved from 17.7% in 1H to 19.3% in 2H Auckland Airport opened Complete six standard transformations Only two completed but pace will increase next year

15 Family Meal Big Kahuna Burger Hot & Spicy Pie Dinner for Two

16 KFC Airport

17 KFC same store sales were up 0.2% despite competitive pressures, improving as the year progressed 5.0% 4.1% 3.0% 1.0% 0.4% 0.2% SSS -1.0% -1.0% -0.9% -3.0% -2.7% -5.0% FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 FY14

18 Total sales grew 1.9% strengthening over the year 6.0% 5.0% 4.0% Total Sales 2.0% 2.4% 1.9% 0.0% 0.3% 0.1% -0.1% -2.0% FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 FY14

19 Value campaign adversely impacted KFC EBITDA, although it was a year of two halves FY12 FY13 FY14 EBITDA $m EBITDA margin (%sales) 19.3% 19.1% 18.4% 1H 2H EBITDA FY14 ($m) EBITDA Margin (%sales) 17.7% 19.3%

20 Store transformation continues with 71 of the 90 stores in the network now at new standard and five year upgrades begin in earnest FY14 Total to date Stores transformed 2 60 New stores 1 10 Acquisitions - 1 Five year upgrades Capital expenditure $3m $89m

21 KFC s strategies are focused on delivering better returns from a well established brand Strategy Outcome Regain positive SSS growth on the back of an improved economic environment, NPD and improved in-store experience Reconsolidate margins with input cost controls and better menu mix Complete transformation of network over next 2-3 years Continuing network improvement through nonperforming store closures, acquiring independents and new store builds SSS >cpi EBITDA margin 19-20% >8 stores transformed next year 1-2 acquisitions 1-2 closures 1 new store

22 PIZZA HUT OPERATIONS $m FY14 $ Δ % Δ FY13/14 FY13/14 Sales EBITDA EBIT* Assets Employed 14.8 (2.4) (14.0) *Excluding non-trading Another strong year for Pizza Hut with total sales up despite six stores being sold to independent franchisees Profit up strongly again by $1.7m (on top of +$1.7m in FY13)

23 Pizza Hut has again outperformed on strategies for the current year Strategy Mark Outcome Maintain positive SSS growth (albeit at more modest levels) Build margin through disposal of lower performing stores and continued efficiencies (plus supply chain initiatives) SSS 15.3% vs. 21.2% in FY13 EBITDA up 45% to $5.5m (11.4% of sales) Continue web capability development Some enhancements, more work to come Continue store sales to independent franchisees (8-10) Six stores sold

24 Garlic Aioli Stuffed Crust Hot Dog Stuffed Crust

25 Pizza Hut continues to enjoy significant SSS growth (rolling over already strong numbers) 30.0% 24.0% 18.0% SSS 28.6% 12.0% 21.2% 6.0% 13.2% 12.7% 8.9% 15.3% 0.0% FY13 Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 FY14

26 EBITDA up 44.8% with sales leverage and a better performing network FY12 FY13 FY14 EBITDA $m EBITDA margin (%sales) 4.6% 7.9% 11.4%

27 Total sales were also up 1.1% despite an 11% reduction in company store numbers $45.5m $47.9m $48.4m 51 sales 30 store numbers FY12 FY13 FY14

28 Pizza Hut strategies for the new year are all about maintaining current momentum Strategy Continue building results through continued improvements in customer service through the value menu with innovative LTO s Maintain margin with benefit of volume leverage and consolidation on bigger stoves Continue store sales to independent franchisees (albeit at a slower rate) Output SSS >5% EBITDA margin >10% 5-6 sales

29 STARBUCKS COFFEE OPERATIONS $m FY14 $ Δ % Δ FY13/14 FY13/14 Sales 25.0 (0.1) (0.3) EBITDA EBIT* Assets Employed 4.0 (0.9) (19.1) *Excluding non-trading Steady improvement in sales and margin on a slimmed down network and pricing and menu changes

30 Starbucks Coffee strategies have delivered for the current year Strategy Mark Outcome Maintain SSS growth through value strategy and continuing improvements in customer experience Solid SSS recovery to +5.7% Close poorer performing stores (3-4) as leases permit Complete some store refurbishment (2-3 stores) Two stores closed during the year St Lukes and Sylvia Park saw extensive upgrades Develop digital opportunities Some website development

31 Caramel Macchiato Dark Cherry Mocha Americano Mocha Cookie Crumble

32 Starbucks Coffee turnaround in same store sales performance from positive outcomes on its pricing strategy and closure of non-performing stores FY12 FY13 FY14 Store numbers Total sales ($m) Total sales growth (%) (9.8)% (5.1)% (0.3)% Same store sales growth (%) 5.4% (1.7)% 5.7%

33 Margins have held despite the value pricing FY12 FY13 FY14 EBITDA $m EBITDA margin (%sales) 14.2% 11.7% 14.0%

34 Starbucks strategies for this year are for a steady as she goes approach Strategy Maintain positive SSS through continued quality, some menu innovation in food and NPD Output SSS >5% Continued EBITDA growth on a profitable network EBITDA margin >10% Some further store refurbishment 2-3 stores

35 CARL S JR. OPERATIONS $m FY14 $ Δ % Δ FY13/14 FY13/14 Sales EBITDA EBIT* (1.4) (0.4) (41.0) Assets Employed *Excluding non-trading Carl s Jr. saw an extensive store rollout (6 stores) in the FY14 year Strong sales growth was a function of the new store rollout but subject to significant fluctuation Set up costs and delays in supply chain savings impacted margin which improved over the year

36 Carl s Jr. strategies for the current year Strategy Mark Outcome Roll out 6-7 stores in new year Built six stores in the year Hold post-opening WPRA sales at not less than KFC levels Ensure stores contribute positive margin post 5-6 month establishment period X Sales levels have dropped below expectation Most stores showing positive EBITDA outcomes post establishment

37 Super Bacon Cheese Burger Jim Beam Bourbon Burger Memphis BBQ Burger

38 Carl s Jr. Airport

39 Carl s Jr. roll out strategy continues to gain momentum with eight stores open at balance date and five more scheduled for FY * RBD Forsgren NZ * 5 2 FY12 FY13 FY14 FY15 planned*

40 EBITDA is improving with brand expected to produce positive earnings in FY $m's Sales Sales 1.9 EBITDA, FY13 EBITDA, -0.5 FY14

41 Carl s Jr. strategies for the new year are focused on consolidating the brand Strategy Maintain momentum of store builds Output Five new stores in FY15 Build positive same store sales growth in existing stores with refinement in menu options and enhanced customer service opportunities Enhanced profitability with reduced set up costs and supply chain benefits SSS >cpi (exclusive of new store peaks) Positive total earnings from Day 1

42 Outlook for FY15 is positive with brand momentum and improving economic environment KFC same store sales growth, some margin gain Pizza Hut continue positive same store sales with profitable residual stores. Margin leverage maintained Starbucks Coffee positive same store sales continue with margins at similar levels Carl s Jr. established stores margin positive. Adverse effect of establishment costs will continue but diluted as brand builds critical mass Net Profit After Tax (excluding non-trading) is expected to be in excess of $20 million for the year