CERVECERIA NACIONAL DOMINICANA, C. POR A. & SUBSIDIARIES ( CND ) Second Quarter 2009 Results. Business Results

Transcription

1 CERVECERIA NACIONAL DOMINICANA, C. POR A. & SUBSIDIARIES ( CND ) Second Quarter 2009 Results SECOND QUARTER HIGHLIGHTS DOP Net Sales down 4.6% DOP EBITDA down 19.5% Business Results MAIN FINANCIAL HIGHLIGHTS ACTUAL ACTUAL April - June Exchange Rate (P&L) - Average June Ending Exchange Rate (BS)

2 SALES VOLUME Sales Volume (in Thousand Htls) 2Q09 2Q08 Fav / (unfav.) % Local Beer (133.9) -15.2% Malt (19.6) -31.1% Rums % Other (0.5) % Total Domestic Volume (150.3) -15.9% Export Beer % TOTAL VOLUME (145.0) -14.5% Second quarter local volume of 796.1M htls was 150.3M htls below the same period in prior year due to lower than expected performance of Presidente and Pte Light, partially offset by Bohemia Light launch. Favorable export volume of 5.4 hlts, mainly due to a May 09 Florida distributor trade loading to recover from an unplanned out of stock. NET SALES Net Sales (in Millions) 2Q09 DOP 2Q08 USD Fav / (unfav.) 2Q09 2Q08 Fav / (unfav.) Local Beer 3, , % % Malt % % Rums % % Other % % Total Domestic Sales 3, , % % Export Beer % % TOTAL SALES 3, , % % 2

3 Local domestic sales (-3.7%): Unfavorable impact of lower beer volume mainly Presidente, Bohemia and Malta Morena, partially compensated by price increase in October 2009 and rums introduced in August Export beer (+23.5%): Favorable sales related to May 09 Florida distributor trade loading to recover from an unplanned out of stock. COST OF GOODS SOLD Cost of Sales (in Millions) 2Q09 DOP 2Q08 USD Fav / (unfav.) 2Q09 2Q08 Fav / (unfav.) Local Beer 1, , % % Malt % % Rums % % Other % % Total Domestic Cost 1, , % % Export Beer % % TOTAL SVC 1, , % % Sales Force & Distrib % % FME % % Depreciation % % Amortization % % TOTAL COST 2, , % % Standard Variable Cost (SVC). Unfavorable 3.5% (RD$49.4MM) driven by higher liquid cost (raw material price increase, mainly malt, grits, and hops), higher new bottle injection and bottle price increase, conversion cost (related to allocation of cost to lower volume and price increase of caustic soda), and packaging materials price increase. Partially offset by lower volume mainly Presidente, Malta Morena and Bohemia. Sales & Distribution +3.2%: +RD$8.3MM favorable mainly due to lower fuel cost, vehicle registration taxes (capex delay) and market research delayed expenses, partially offset by higher maintenance & repair expenses. Fixed Manufacturing Expenses (FME): Unfavorable -3.4% (RD$7.3MM) mainly related to fixed expenses charged to inventory, personnel related and cleaning material expenses, partially offset by lower usage and price of fuels, lower freight expenses, and product write-off expenses. Lower depreciation of +$3.7MM and amortization expenses of +$0.3MM. 3

4 MARKETING EXPENSES Trade expenses +RD$15.6MM mainly driven by lower expenses of Presidente POS materials and trade programs, Media (RD$72.8MM) due to Presidente Summer Campaign expenses, new product launch (Bohemia Light), World Classic Baseball Series campaign (sponsored by Presidente and Barceló Rum), partially offset by lower Bohemia media expenses. Promotions (RD$30.5MM) mainly due to Barceló World Classic Baseball Series campaign expenses, higher Presidente sponsorship and Presidente export promotion expenses. Indirect marketing (RD$15.6MM) Higher personnel related (higher headcount and new compensation scheme), coolers and vehicles depreciation, partially offset by lower market research expenses. GENERAL & ADMINISTRATIVE EXPENSES 4

5 Administration (RD$29.4MM): related to the Process Redesign Project and higher consultant expenses partially offset by lower personnel related expenses. Corporate Affairs (RD$24.9MM) driven by higher donations, special events (Casandra Awards), public relations and market research. R&D +RD$28.9MM due to new products development carried out in 2Q Other +RD$2.5MM: IT +RD$15.3MM related to software licenses (Microsoft, SAP), partially offset by lower consultant expenses. Higher Finance (RD$3.6MM), Security (RD$3.2MM), Fleet Management (RD$1.5MM), and Presidente USA expenses (RD$5.4MM) due to higher personnel related expenses (mainly new compensation scheme). Others +RD$0.9MM. OTHER INCOME / (EXPENSES) Foreign exchange gain / (loss) related to exchange rate increases in Favorable Other Income mainly due to reversal of severance provision liabilities in June Lower Interest Income driven by lower cash equivalent investments. Lower Interest Expenses (including other financial expenses, see attachment on page 13). 5

6 EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) EBITDA composition for Second quarter 2009 and changes as compared to 2008 are as follows: EBITDA decreased 19.5% mainly due to lower sales and higher cost (mainly liquid and bottles), higher DME, G&A and IME expenses. BALANCE SHEET Total assets for the period ended June 30, 2009 were 3.3% lower than year ended December 31st, 2008 mainly due to lower Account Receivables-Trade (RD$671MM), PP&E (RD$325MM), Prepaid Expenses (RD$342MM) & Others (RD$19M). Partially offset by higher Inventories RD$268MM & Cash & Equivalents RD$132MM. Total liabilities decreased 2.8% mainly driven by lower Excise & VAT Tax (RD$291MM), lower Accounts Payable Trade (RD$444MM), other Accrued Liabilities (RD$244MM), lower Debt (RD$80MM) & Others (RD$100MM). Partially compensated by higher Dividends Payable RD$631MM. 6

7 CAPITAL EXPENDITURES (CAPEX) Capital expenditures as of June 30th were RD$183.9 millions, driven by Evaporators system for brew houses RD$38.7MM, freezer projects RD$25.4MM, packaging equipment RD$10.8MM, Overhaul brew house machinery RD$13.1MM, Land to Relocate CND Santiago D.C. RD$20.7MM, new land for warehouse RD$28.1MM, additional kegs RD$5.2MM, replacement of water softener RD$3.4MM, additional plastic crates RD$4.7MM, software related projects RD$11.9MM, New DC - Sto Dgo North RD$2.2MM, replacement of forklifts RD$1.6MM, other additions RD$18.1MM. As of June increase capacity capex was RD$91.9MM, the remaining replacement and maintenance capex was RD$92.0MM. Subsequent Events On August , Cervecería Nacional Dominicana (CND) has entered into a US$31 Million Dollars purchase agreement for Royal Unibrew A/S controlling stakes in its beer, malt, soft drink and water operations in Saint Vincent, Antigua and Dominica. Royal Unibrew A/S is a Danish publicly traded company with operations in Denmark, Poland, Lithuania, Latvia and the Caribbean. This transaction, which falls within CND s strategic plans, will result in the acquisition of 76.5% of Saint Vincent Brewery Ltd, 93% of Antigua Brewery Ltd., 75% of Antigua PET Plant Ltd., and 58% of Dominica Brewery & Beverages Ltd. These companies, leaders in their respective markets, currently own or license beer brands such as Hairoun, Wadadli, and Kubuli, Guinness stout, Vitamalt, soft drinks, and Duna and Loubiere waters. The agreement also covers a license for the production and commercialization of Vitamalt, Royal Unibrew s global premium malt brand. This acquisition strengthens CND s position as a regional producer in the Caribbean. In addition, CND will continue to develop its operations in the Dominican Republic. The transaction is subject to customary conditions and is expected to close no later than February 2010, when full payment would be required. CND plans to fund this transaction with additional financing, effective in the 1st. Qtr

8 Investors Relations For additional information please contact the Investor Relations: Eduardo Curiel (809) The information contained in this Financial Report reflects the consolidated results of operations of Cervecería Nacional Dominicana, C. por A. ( CND ) and its subsidiaries, Cervecería Bohemia, S. A. and Presidente USA, Inc. for the periods ended June 30, 2009 and June 30, Results for the period ended June 30, 2009 may not be representative of results to be expected for the full year. In this Financial Report references to DOP, pesos, Dominican pesos and RD$ are the currency of the Dominican Republic and references to dollars, USD, and US$ are the currency of the United Stated of America. Certain numbers included in this Financial Reports have been subject to rounding adjustments. Accordingly, numbers shown as totals in certain tables may not be an arithmetic aggregation of the numbers that precede them. 8

9 Attachments CERVECERIA NACIONAL DOMINICANA, C. POR A. & SUBSIDIARIES Unaudited Consolidated Balance Sheet RD$ Millions Assets June December Current Assets Inc / Dec Cash & Cash Equivalent 1, % Accounts receivable-trade 1, , % Other receivables % Notes receivable parent company Inventories 1, , % Deferred income tax % Prepaid expenses , % Total current assets 5, , % Investment in parent Company 12, , % Property, plant, and equipment, less accumulated depreciation 10, , % Deferred income tax % Other assets % 28, , % Liabilities and Stockholders Equity Current liabilities Short-term debt % Accounts payable , % Other current liabilities 1, , % Dividends payable % Total Current Liabilities 3, , % Long-term debt 14, , % Deferred income tax % Other obligations % 18, , % Stockholders Equity 9, , % 28, , % 9

10 CERVECERIA NACIONAL DOMINICANA, C. POR A. & SUBSIDIARIES Unaudited Consolidated Income Statements for the Three Month Ended June 30, 2009 and 2008 (In Millions Dominican pesos) April - June Fav./(Unfav.) January - June Net sales 3, , % 7, ,463.8 Cost of goods sold 2, , % 3, ,968.9 Gross profit 1, , % 3, ,494.9 Marketing expenses % 1, General and administrative exp % Total Marketing and Adm. Exp. 1, % 2, ,874.7 Income from operations % 1, ,620.2 Other income (expenses) Other income % Other expenses (6.5) (11.2) 42.4% (12.7) (111.9) Foreign exchange G/(L) (16.7) (37.2) -55.0% (66.0) (13.4) Interest inc./(exp.), net (516.4) (544.9) 5.2% (1,042.7) (1,244.7) Total Other Income/(Expenses) (520.9) (360.2) -44.6% (1,009.7) (1,129.6) Income before income tax % Dividend Income - Uncons. Affiliate % Income tax (0.5) % (1.0) Net income % ,

11 CERVECERIA NACIONAL DOMINICANA, C. POR A. & SUBSIDIARIES Unaudited Consolidated Income Statements for the Last Twelve Month Ended June 30, 2009 and 2008 (In Millions Dominican pesos) 2009 L-T-M 2008 L-T-M Fav./(Unfav.) Net sales 16, , % Cost of goods sold 8, , % Gross profit 7, , % Marketing expenses 2, , % General and administrative exp. 2, , % 4, , % Income from operations 3, , % Other income (expenses) Other income % Other expenses (58.7) % Foreign exchange G/(L) (113.4) (336.8) 66.3% Interest inc./(exp.), net (1,977.0) (2,337.2) 15.4% (2,018.6) (2,319.9) 13.0% Income before income tax 1, % Dividend Income - Uncons. Affiliate % Income tax (160.1) % Net income 1, , % 11

12 CERVECERIA NACIONAL DOMINICANA, C. POR A. & SUBSIDIARIES JUNE 2009 SOURCES AND USES Vs. DECEMBER 2008 DECEMBER 31st JUNE 30th BEGINNING FINANCIAL POSITION 1, OPERATIONAL SOURCES - Net Income /(Loss) 1, Depreciation 1, Amortization Loss on disposals of P, P & E Deferred income tax 32.3 (0.0) - Provision for severance payments (215.7) (0.2) - Other non cash sources - - TOTAL OPERATIONAL SOURCES 3, ,512.0 CASH FLOWS FROM OPERATING ACTIVITIES - Acct. Receivables - Trade (51.0) Acct. Receivables - Other (494.6) (379.1) - Inventories (355.4) (268.3) - Prepaid Expenses (361.5) Acct. Payable (523.3) - Other Current Liabilities (66.9) (841.1) TOTAL WORKING CAPITAL (1,123.1) (1,106.3) CASH FLOWS FROM INVESTMENT ACTIVITIES - Other Long Term Assets Notes Receivable from Parent Company Proceeds from disposal of PP&E Adquisition of P, P & E. (1,098.0) (196.5) - Investment in Parent Company TOTAL CASH FROM INVESTMENT (1,020.1) (129.6) CASH FLOWS FROM FINANCING ACTIVITIES - Proceeds from borrowed funds (496.9) (80.0) - Dividends Paid (668.8) (64.4) TOTAL CASH FROM FINANCING ACTIVITIES (1,165.8) (144.5) EFFECT OF EXCHANGE RATE CHANGES & ADJS (1.9) 0.3 FREE CASH FLOW (68.7) ENDING FINANCIAL POSITION ,124.0 DECEMBER 31st JUNE 30th Cash Equivalents / Investments ,124.0 ENDING FINANCIAL POSITION ,

13 Interest Expenses 2nd Quarter 2nd Quarter (RD$ in Millions) (US$ in Millions) Int Exp Bank Loans Interests (65.5) (116.0) 50.5 (1.8) (3.4) 1.6 Other Financial Expenses - Banks (2.4) (48.8) 46.4 (0.1) (1.4) 1.4 Int Exp Notes Interests (454.5) (408.7) (45.8) (12.7) (12.0) (0.7) Other Financial Expenses - Notes (8.6) (7.9) (0.7) (0.2) (0.2) (0.0) Other Non Debt Expenses (0.8) (0.5) (0.3) (0.0) (0.0) (0.0) Total (531.8) (581.9) 50.1 (14.8) (17.1) 2.3 Bank loans interests includes accrued interest from the syndicated DOP loan and from the bilateral DOP loan. Notes Interests includes accrued interests from the USD issued Notes, the Peso-Linked issued Notes & the DR Market DOP issued Notes. Other Financial Expenses includes amortization of financial commission fees. 13