Turkey s Largest Food Company

Transcription

1 Turkey s Largest Food Company F i r s t H a l f 2017 F i n a n c i a l R e s u l t s A u g 16, Borsa Istanbul: ULKER ULKER.TI (Bloomberg) ULKER IS (Reuters)

2 Disclaimer This presentation contains information and analysis on financial statements and is prepared for the sole purpose of providing information relating to Ülker. This presentation contains forward-looking statements which are based on certain expectations and assumptions at the time of publication of this presentation and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in these materials. Many of these risks and uncertainties relate to factors that are beyond Ülker s ability to control or estimate precisely, such as future market and economic conditions, the behavior of other market participants, the ability to successfully integrate acquired businesses and achieve anticipated cost savings and productivity gains as well as the actions of government regulators. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. Ülker does not undertake any obligation to publicly release any revisions to these forwardlooking statements to reflect events or circumstances after the date of these materials. This presentation merely serves the purpose of providing information. It neither represents an offer for sale nor for subscription of securities in any country, including Turkey. This presentation does not include an official offer of shares; an offering circular will not be published. This presentation is not allowed to be reproduced, distributed or published without permission agreement of Ülker. The figures in this presentation are rounded to provide a better overview. The calculation of deviations is based on figures including fractions. Therefore rounding differences may occur. Neither Ülker nor any of its managers or employees nor any other person shall have any liability whatsoever for any loss arising from the use of this presentation. 2

3 Jan-16 Feb-16 arch-16 April-16 May.16 June-16 July-16 Aug-16 Sept-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 April-17 May-17 June-17 Turkey Macro Economic Overview 128,6 133,3 132,1 131,7 130,6 130,1 Retail Sales Volume Index 126,0 129,8 129,4 128,3 128,3 128,1 127,3 126,5 130,9 131,3 132,1 132,3 Retail sales volume Index (Adj.) improved by 3.9% in 2017 over 2016 year-end Industrial Production index averaged in 2016, and in H Industrial Production Consumer confidence reached to 70 at the end of first half of 2017 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Consumer Confidence Index 71,6 66,6 67,0 68,5 68,8 69,4 67,0 74,4 74,3 74,0 68,9 63,4 66,9 65,7 67,8 71,3 72,8 70 Consumer price inflation was 10.9 % in June 2017 YOY Food price inflation was 14.4% in June 2017 YOY 3

4 Market Growth Market Growth % (Volume & Value in H1 2017) Total Confectionary 5,0% Volume 11,8% Value Confectionery market growth posted by 11.8% in value terms Biscuit 6,3% 11,8% Biscuit market in Turkey grew by 11.8% Volume Chocolate Value Chocolate market in Turkey grew by 11.5% 1,9% Volume 11,5% Value Cake market posted a growth of 12.7% Cake 8,0% 12,7% Source: ACNielsen Volume Value 4

5 Consolidated Figures TL ('000) Q Q % H H % Volume ('000 Ton) 164,6 135,0-18,0% 319,2 298,1-6,6% Confectionary 129,3 126,4-2,3% 263,1 268,3 2,0% Non-Confectionary 35,3 8,6-75,6% 56,1 29,9-46,7% Revenue 1.002, ,8 11,1% 2.037, ,7 15,1% Confectionary 954, ,6 13,7% 1.953, ,9 16,3% Non-Confectionary 47,6 28,2-40,8% 84,8 74,7-11,9% Price Increase Excl. Other (Per Ton) 16,3% 14,0% Gross Profit 245,8 267,1 8,7% 498,4 570,3 14,4% Gross Profit Margin 24,5% 24,0% 24,5% 24,3% EBITDA 141,9 155,9 9,9% 284,3 331,6 16,6% EBITDA Margin 14,2% 14,0% 14,0% 14,1% 5

6 Category Breakdown 6 Sales Volume (Tons) Net Sales (TL mn) Biscuit Chocolate Cake Q2016 2Q2017 H12016 H12017 Consolidated confectionary sales volume was down by 2.3% and up by 2% in the second quarter and in the first half of 2017, respectively; Consolidated biscuits sales contracted by 1.5% in Q217 and expanded by 5.6% in H117 Consolidated chocolate sales was down by 3.7% in Q217 and 1.8% in H117 Consolidated cake operation was down by 1.8% in Q217 and 3.1% H117 Biscuit Chocolate Cake 954,9 96,5 481, ,9 Consolidated confectionary revenue grew by 13.7% and 16,3% in the second quarter and first half of 2017,respectively ; The higher growth at the top line was mainly due to; Price adjustments Fx impact New launches 1.085,6 103,5 546,1 376,5 436, ,1 204,9 990,6 757,5 Consolidated biscuits revenue expanded by 15.8% in Q217 and 23.1% in H , ,4 932,3 2Q2016 2Q2017 H12016 H12017 Consolidated chocolate revenue escalated by 13.3% in Q217 and %13 in H117 Consolidated cake sales revenue rose by 7.2% in Q217 and 7% in H117 6

7 Domestic Operations 7

8 #1 in total confectionery with 36% market share 8 Turkey Value Biscuits 36% Market Share Chocolate 39% Market Share Cake 28% Market Share # 1 in Petit Beurre # 1 in Creamy Biscuits 4 out of Top 5 in Chocolate Covered #1 in Cake # 1 in Chocolate Covered Sandwich # 1 in Special Biscuits #1 in Solid Chocolate #2 in Portion Cake # 1 in Cracker #1 in Spread Chocolate #2 in Wet Cake # 1 in Sandwich Biscuits # 2 in Chocolate Biscuit Ulker Biskuvi Market Share Development, Value Based* - Last 12 Month 35,8% 35,7% 39,5% 38,7% 28,4% 28,0% *Source: AC Nielsen LTM Value Share 8

9 Branded Sales Contribution of Synergy Products Synergy Products 9

10 2017 Synergy Products 10 10

11 2017 New Launches 11 Biscuit Cake Chocolate 11

12 Strong performance prevailed in Q Sales Volume (tonnes) Net Sales(TL mn) Gross Profit (TL mn) EBITDA (TL mn) 24.2% 21.9% 15.1% 14.2% 705,3 785,8 170,8 172,3 106,7 111, Delivered %3,7 growth in branded sales Strong growth in branded cakes sales,by %9,8 Branded revenue improved by 13.8% Predominately driven by price increase and mix effect Gross Profit slighty grew to 172,3 mtl Rising input costs Thanks to tight opex management, EBITDA parked at %14,2, mtl Overall volume was inline with last Q Priced increase showed positive development by %9,7 Overall growth was up by 11.4% 12

13 Strong growth in volume and net sales in H Sales Volume (tonnes) Net Sales(TL mn) Gross Profit (TL mn) EBITDA (TL mn) 23.9% 21.9% 14.7% 14.1% , ,7 342,4 352,1 210,3 225,8 Branded sales continue with a good performance and up by by 6.8%; New launch Powerful media investment Overall volume increased by 3.3% Branded revenue up by 14.4%; Effective pricing strategy Mix impact New launch Price per tonnes improved by 7.1% Overall revenue up by 11.9% Gross Profit up by 2.8%; Gross Profit margin was parked at 21,9% Rising input costs EBITDA was reported as 225,8 m TL, representing 14.1% of sales Saving in operating expenses 13

14 Increased branded sales boosted by synergies 14 Branded-Non Branded Breakdown Volume Branded-Non Branded Breakdown Revenue +3.0 pp +2.1pp 88,3% 91,3% 92,9% 95,0% H H H H ,7% 8,7% 7,1% 5,0% Branded Non Branded Branded Non Branded Branded Non Branded Branded Non Branded 14

15 International Operations 15

16 Egypt To become #1 in biscuits, #2 in cake & in top 5 in chocolate 16 Snapshot of Egypt (2017) Population 90 mn Population Growth Rate* c2.0% GDP** bn USD Traditional Channel c80% Size of Confectionery Market ($) 1,0 bn Market Size (Vol) % % 14% 17% 18% 1% 24% 1% 1% 64% 65% 58% F 2019F Cake Chocolate Savory Biscuits Sweet Biscuits FINANCIAL REVIEW H H Change Sales Volume (tonnes) ,2% Net Sales (EGP x000) ,1% EBITDA(*) (EGP x000) ,2% EBITDA Margin 13,9% 5,2% *Had ATL+BTL spendings would be inline with previous year, EBITDA of the company would be 23 M EGP, 6.9% margin. * Source: Worldbank CAGR ** Source: IMF CAGR 16

17 Saudi Arabia To become a strong challenger in the biscuit & confectionery market 17 Snapshot of Saudi Arabia (2017) Population 31 mn Population Growth Rate* c2.2% GDP** bn USD Size of Confectionery Market ($) 2,8 bn 160,0 140,0 120,0 100,0 80,0 60,0 40,0 20,0 - Market Size (Vol) % 5% 31% 28% 3% 2% 56% 46% 150 5% 33% 3% 65% % 2016F 30% 2019F 29% Candy Cakes Savoury Biscuits Sweet Biscuits Chocolate FINANCIAL REVIEW H H Change Sales Volume (tonnes) ,2% Net Sales (SAR x000) EBITDA (SAR x000) ,3% ,6% EBITDA Margin 14,0% 13,7% * Source: Worldbank CAGR ** Source: IMF CAGR 17

18 Kazakhstan A bridge from East to West 18 Snapshot of Kazakhstan (2017) Population Population Growth Rate* GDP** 17.5 mn c1.5% Traditional Channel c80% Size of Confectionery Market ($) 185 bn USD 1,3 bn 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10, % 12% 12% 2% 24% 2% 22% 3% 3% 22% Cakes 2% Savoury Biscuits 64% 62% 64% Sweet Biscuits 30% 30% 29% Chocolate F 2019F FINANCIAL REVIEW H H Change Sales Volume (tons) ,8% Net Sales (KZT x000000) EBITDA (KZT x000000) ,7% 329,8 271,4-17,7% EBITDA Margin 7,4% 6,3% * Source: Worldbank CAGR ** Source: IMF CAGR 18

19 Strong brand recognition in operating territories 19 Egypt Biscuits 13.4% Market Share Saudi Arabia Biscuits 13.4% Market Share Kazakhstan Chocolate 8.4% Market Share # 1 in Filled (Biskrem and Tamr brands) # 1 in Plain # 1 in Filled # 2 in Plain (Teabiscuits and Finger biscuits) # 4 in Sandwich #1 in Coated # 3 in Wafer Ulker Biskuvi Market Share Development, Value Based* Last 12 Month 13,2% 13,4% 13,3% 13,4% 8,2% 8,4% *Source: AC Nielsen Value Market Share 19

20 2017 New Launches 20 EGYPT KAZAKHSTAN *Source: AC Nielsen 20

21 2017 New Launches 21 SAUDI ARABIA *Source: AC Nielsen 21

22 Improvements on the ground led higher profitability 22 in Q Confectionery Sales Volume (tonnes) Confectionery Net Sales (TL mn) Gross Profit* (TL mn) EBITDA* (TL mn) 25.3 % 28.9% 11.8% 13.5% ,6 299,8 75,0 94,8 35,2 44,2 Overall volume was contracted by 9.7%, mainly due to nonbranded sales Low performance in export channel, mainly in Central Asia and Iraq Branded revenue up by 21.6% Overall revenue was up by 20,2% in Q Gross Profit was confirmed positive growth momentum by 26.3% Continued EBITDA grow by 25,8% EBITDA margin increased to 13.5% with rise of 1.8 pp Includes non-confectionery Gross Profit & EBITDA 22

23 Strong performance prevailed in H with profitability focus 23 Confectionery Sales Volume (tonnes) Confectionery Net Sales (TL mn) Gross Profit* (TL mn) EBITDA* (TL mn) 25.8% 29.4% 12.2% 14.3% ,5 666,2 156,0 218,2 74,0 105,8 Branded sales volume up by 4.1% Overall volume was lower in H by 1.5% Accelerated branded revenue growth by 31.5% Overall revenue was up by 28.2% in H1 2017; Gross Profit was up by 39.8% Continued gross margin increased to 29.4%, gains of 3.6 pp EBITDA growth by 43% and margin improvement of 2.1 pp to %14.3 Effective pricing strategy Fx impact New launches Efficiencies gained from capex investments Improved raw material sourcing Includes non-confectionery Gross Profit & EBITDA 23

24 Strategy to focus in branded confectionery products24 Confectionery Branded-Non Branded Breakdown Volume Confectionery Branded-Non Branded Breakdown Revenue +4.0 pp +2.0 pp 29,4% H ,6% 25,4% H ,6% 22,3% H ,7% 20,2% H ,8% Branded Non Branded Branded Non Branded Branded Non Branded Branded Non Branded 24

25 Cash Cycle and Net Debt TL 545,6 mn Average working capital days TL 616,3 mn Cash Cycle of 38 days in H (40 days in H1 2016) Working capital requirement over sales ratio was 14.2% in H and 13.6 in H Net debt stands at TL 754 mn as of June 30, 2017 H H A/R A/P Inv Net Debt (TL mn) Net debt to EBITDA is 1.28x in H and 1.2x as of 31 December Maturity breakdown as of Jun 30, 2017: 656,8 754,0 - Short term 61.0% - Long term 39.0% 25

26 Net Position (Million TL/$/ ) TL Equivalent USD EUR GBP Cash and cash equivalent 3.122,3 422,6 409,0 0,6 Trade Receivables 116,4 22,5 8,6 0,7 Other non-current Asset 0,1 0,0 - - Total Assets 3.238,8 445,1 417,6 1,4 Financial Liabilities 2.242,4 356,1 248,2 - Trade Payables 73,4 12,1 7,4 0,3 Other 0,9 0,2 0,1 0,0 Current Liabilities 2.316,8 368,4 255,7 0,3 Financial Liabilities 1.425,7 136,1 236,9 - Non-Current Liabilities 1.425,7 136,1 236,9 - Total Liabilities 3.742,4 504,5 492,6 0,3 Net Position (503,6) (59,4) (75,0) 1,1 Derivative Transactions 526,9 127,4 20,0 - Net Position after Derivative Transactions 23,3 68,0 (55,0) 1,1 The net effect of short fx position is minimized through derivative instruments. 26

27 Financials-Reported 27 Consolidated Income Statement Income Statement(TL mn) 2Q 2016 Restated H Q 2017 H Restated Sales Revenues 1.002, , , ,66 Growth (%) 11,1% 15,1% Gross Profit 245,8 267,1 498,4 570,3 Growth (%) 8,7% 14,4% Gross Profit Margin 24,5% 24,0% 24,5% 24,3% Marketing, Sales & Distribution Expenses (87,1) (97,3) (187,3) (219,5) General Administration Expenses (34,9) (36,4) (63,2) (63,9) Research Expenses (2,2) (3,4) (4,3) (6,3) Other Operating Inc/Exp, net 4,1 (4,5) 5,0 4,5 Operating Profit 125,8 125,5 248,6 285,0 Income from Investments 54,9 26,6 47,8 135,1 Operating Profit before Financial Inc/Exp 180,7 152,1 296,4 420,1 Finance Inc/Exp, net (54,0) (39,3) (47,3) (168,5) Profit Before Taxation 126,7 112,8 249,1 251,6 Tax Charge from Continued Operations (23,5) (17,9) (48,6) (44,3) PROFIT FOR THE PERIOD 103,3 94,9 200,5 207,3 Non Controlling Interests 10,2 10,8 20,5 24,4 Equity Holders of the Parent 93,0 84,1 180,0 182,9 25

28 Turkey s Largest Food Company Q u e s t i o n s & A n s w e r s