SABMiller plc Interim results Half year ended 30 September 2005 10 November 2005 also available on website www.sabmiller.com
Forward-looking statements This presentation includes forward-looking statements. These statements contain the words anticipate, believe, intend, estimate, expect and words of similar meaning. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company s products and services) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this presentation. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based." SABMiller plc 2005 2
Welcome Meyer Kahn Chairman
Agenda Financial and operating overview Malcolm Wyman, Chief Financial Officer % Looking Ahead: Near-term outlook drivers Graham Mackay, Chief Executive Q&A SABMiller plc 2005 4
Financial and operating overview Malcolm Wyman Chief Financial Officer
Strong financial results % Adjusted EPS* up in our major currencies US $ + 10% (+14% on a comparable basis) Sterling + 10% Euro + 8% Rand + 9% Interim dividend up 8% to 13 US cents * Excluding additional 225m shares issued in respect of Bavaria transaction in October SABMiller plc 2005 6
Key drivers of financial results Total volumes of 110.6mhl +10.4% Organic +6.3% Lager organic volumes of 86.6mhl +5.6% North America : total +0.9%* : domestic STRs -0.3%* Central America -7.3% Europe +4.4% Africa and Asia (comparable) +13.5% Beer South Africa (comparable) +2.9% * Excluding contract brewing SABMiller plc 2005 7
Key drivers of financial results Organic group revenue +9% Organic constant currency +7% EBITA margin* Organic constant currency +20 bps +30 bps Organic EBITA* +12% Organic constant currency +9% * Pre exceptional, includes associates SABMiller plc 2005 8
Group revenue Components of performance US$m 8,500 8,000 +6.3% +0.5% +1.8% +8.6% +1.5% 7,901 7,500 7,178 7,000 6,500 6,000 Sep 04 Volume Price/mix Currency Sep 05 Organic Acquisitions/ disposals/ (net) Sep 05 SABMiller plc 2005 9
EBITA* Components of performance US$m 1,300 +2.6% +11.9% (0.2)% 1,264 +9.4% 1,200 1,130 1,100 1,000 Sep 04 Underlying Currency Sep 05 Organic * Pre exceptional Acquisitions/ disposals/ (net) Sep 05 SABMiller plc 2005 10
EBITA margin performance* 25 % 20 Sep-04 Sep-05 18.5 19.8 20.6 21.0 18.7 20.1 15.8 16.1 15 10 11.5 10.7 13.9 12.4 5 0 North America Central America * Organic, constant currency, pre-exceptional Europe Africa & Asia SA Beverages Group SABMiller plc 2005 11
North America Sep 05 US$m Sep 04 US$m Change % Group revenue 2,662 2,615 2 EBITA* 286 301 (5) EBITA margin* (%) 10.7 11.5 (80)bps Volumes (hl 000) Total volumes** 25,697 25,473 0.9 Domestic STWs 1.1 Domestic STRs (0.3) Continued Miller Lite momentum despite intense price competition Turnaround on track * Pre-exceptional ** Excluding contract brewing SABMiller plc 2005 12
Europe Sep 05 US$m Sep 04 US$m Change % Organic constant currency Group revenue 1,756 1,617 9 EBITA* 348 299 16 EBITA margin* (%) 19.8 18.5 130bps Organic volumes (hl 000) Lager 20,667 19,797 4 Strong volume performance despite adverse weather in summer Margin benefits from productivity, price and mix * Pre exceptional SABMiller plc 2005 13
Africa and Asia Sep 05 US$m Organic constant currency Group revenue 972 870 12 EBITA* 205 179 14 EBITA margin* (%) 21.1 20.6 50bps Organic volumes (hl 000) Sep 04 US$m Change % Lager 27,268 23,851 13 Carbonated soft drinks 1,939 2,000 (3) Other beverages 7,142 6,113 17 * Pre exceptional SABMiller plc 2005 14
SA Beverages Sep 05 Organic constant currency US$m Sep 04 US$m Change % Group revenue 1,857 1,684 10 EBITA* 373 315 19 EBITA margin* (%) 20.1 18.7 140bps Organic volumes (hl 000) Lager 12,153 11,992 1 Carbonated soft drinks 5,922 5,384 10 Other beverages 492 394 25 Good underlying growth driven by premium brands Margin improvement from product and pack mix and cost efficiencies * Pre exceptional SABMiller plc 2005 15
Cash flow and taxation EBITDA* up 11% to $1,418m EBITDA* margin up 30 bps to 20.1% Working capital requirement $(129)m Net cash flow from operations up 2% to $1,289m Capex $404m up 21% Effective tax rate* 35.3% * Pre exceptional SABMiller plc 2005 16
Financial structure Interest bearing debt 30 Sep 05 US$m 1 Apr 05 US$m Medium/long term IBD 2,428 2,551 Short term IBD 1,154 814 Current investments/cash (1,142) (1,143) Net derivatives (12) (12) Net debt 2,428 2,210 Gearing (%) 27.2 25.2 EBITDA interest cover* 18.4 16.4 * Excluding associates SABMiller plc 2005 17
Bavaria transaction Controlling shareholding (71.8%) w.e.f. 12 October 2005 Major minority shareholdings acquired Colombia (Leona): $176m Peru: $470m Colombian voluntary tender offer process initiated: $1,362m (1) Tender date 5 December 2005 Settlement on the 13 December 2005 Financing activities ongoing +6 months Refinancing $3.5bn bridge Review of Bavaria debt Credit ratings maintained: S&P BBB+ Moody's Baa1 (stable outlook) (1) Assumes full take-up on offer SABMiller plc 2005 18
Financial outlook Continued underlying growth Ongoing investments in marketing and business infrastructure General cost pressures energy/commodity prices Rand likely to be at weaker levels than in H2 F05 Bavaria consolidated from 12 October 2005 SABMiller plc 2005 19
Financial outlook Full year capex to be some US$1.1bn including Bavaria Full year tax rate* expected to be approximately 36% Net debt between $6 and $6.5 bn including Bavaria debt and minority buyouts * Before exceptional items SABMiller plc 2005 20
Looking ahead: Near-term outlook drivers Graham Mackay Chief Executive
Profit drivers for the future Cumulative earnings growth Leading positions in large emerging markets International premium brands Turnaround of Miller Strong domestic operations in growth markets April 2003 Time horizons Illustrative SABMiller plc 2005 22
Attractive exposure to growth markets Embedded volume growth 5yr CAGR 2005 2010: SABMiller markets 2.5 World 2.2 North America 0.8 West Europe 0.1 0 1 2 3 % Source: Plato Logic SABMiller plc 2005 23
Global beer growth outlook USA and Western Europe Encroachment of wines and spirits Cost and retailer driven margin pressure Drift towards off-premise, margins under strain Developing markets Robust growth continuing Consumers broadly trading into beer from spirits Brand and market development enable unit revenue and margin growth opportunities SABMiller plc 2005 24
North America Highly competitive summer impacting margins and profitability Investment in business and brands continues Miller Lite strength holding up Encouraging response to Milwaukee s Best and Miller High Life marketing investment Worthmore focus in sales and marketing Local market planning synchronised with distributors Turnaround nears completion SABMiller plc 2005 25
Central America Weak economic conditions prevail in markets Growth in CSDs driven by investment in Coca-Cola brands Competing effectively with our strong beer portfolio SABMiller plc 2005 26
South America Integration team is in place Strong revenue performance continuing Five focus areas Category leadership Brand portfolio development Channel marketing and management Pricing management Operating efficiencies SABMiller plc 2005 27
Europe Mid-single digit volume growth, despite Russian slow down Positive mix moderating, competitive pricing environment Italy restructuring continues with positive results Widespread marketing investment driving competitive advantage Share gains in most countries driven by innovation within core brands Poland: double-digit volume growth, 2.3% share gain SABMiller plc 2005 28
Africa Portfolio delivers mid-single digit lager volume growth Tanzania: economic strength, full brand portfolio, focus on Castle Mozambique: new depots drive volume, scale efficiencies and consumer affordability Zambia: strength in traditional beer and Eagle Botswana: devaluation impact will accelerate in the second half Productivity gains Castel growth should continue SABMiller plc 2005 29
Asia China Strong organic results - increased market share from c.12% to c.13% Improving national footprint with surge in sales of Snow Increasing marketing investment Average selling prices showing moderate increases Acquisitions made in 2004 bedding down India Strong growth of 12% pro-forma from low base Liberalisation of the beer market is key SABMiller plc 2005 30
South African Beverages Beer volumes rose 3% on comparable basis, CSD growth stronger at 10% Favourable economic conditions continue Enhanced premium segment merchandising drives positive mix Increased premium brand support Success in broadening our CSD consumer base Licensing: slow progress SABMiller plc 2005 31
Innovation in core brands: mainstream segment USA Recreated brand image and relevance to target demographics Mozambique Developing as core brand with expanding distribution; growth of 21% in H1 Romania Using platform to create strong national brand to accompany Ursus and Ciucas China Redefining the mainstream segment; building brand equity, portfolio focus and effectiveness in trade; growth of 51% in H1 SABMiller plc 2005 32
Innovation in core brands: local premium segment Poland Renovated brand positioning, packaging, and channel focus; share up 2%, now #3 brand Romania Repositioning drove higher volumes, improved mix Czech Republic Further enhanced this historic brand equity, build enlarged onpremise presence South Africa Leveraging drift to premium with this, SAB s large and fastest growing premium brand; volumes doubled in H1 SABMiller plc 2005 33
Innovation in core brands: lower mainstream segment USA Leveraging strong heritage; arguably best value for money offering in the market Uganda, Zambia Improved affordability of branded clear beer Poland Positioned as the natural choice for relaxation after hard work Honduras Designed to compete more effectively with low-priced spirits SABMiller plc 2005 34
Poland: business upgrade case study Created leading full brand portfolio - Renovation of Tyskie and Lech - National presence of new Zubr - Full worthmore complement Led market innovation - Brands, proprietary bottles, multi-packs, displays, high impact fridges Poland s top 3 brands covering upper, middle and lower mainstream Upgraded channel performance, customer service and POS impact - On-premise share +3% to 39% with strong position among image outlets - Leadership in modern trade (share +8%) despite greater discounting by competitors A replicable strategy across emerging markets SABMiller plc 2005 35
Looking ahead Benefit from exposure to attractive growth markets Increased commodity costs and investment in marketing Less favourable exchange rates Outlook for continued growth SABMiller plc 2005 36
Q&A
Supplementary information
Central America Sep 05 US$m Sep 04 US$m Change % Organic constant currency Group revenue 268 260 3 EBITA* 33 36 (8) EBITA margin* (%) 12.4 13.9 (150)bps Organic volumes (hl 000) Lager 826 891 (7) Carbonated soft drinks 2,991 2,886 4 Other beverages 1,451 1,410 3 * Pre exceptional SABMiller plc 2005 39
Financial results Sep 05 US$m Sep 04 US$m Change % Group revenue 7,901 7,178 10 EBITA* 1,264 1,130 12 EBITA margin* (%) 16.0 15.8 20bps Sales volumes (hl 000) Total 110,584 100,193 10.4 Lager 90,603 81,959 10.5 Carbonated soft drinks 10,894 10,317 5.6 Other beverages 9,087 7,917 14.8 *Pre exceptional SABMiller plc 2005 40
Volumes* Lager beer volumes by country HL 000 Sep 05 Poland 6,702 5,989 12 Czech Republic 4,650 4,573 2 Hungary 1,294 1,243 4 Russia 2,372 2,228 6 Romania 2,006 1,759 14 Italy 2,602 2,700 (4) Tanzania 1,111 1,038 7 Botswana 246 276 (11) Mozambique 544 486 12 China 26,703 20,486 30 * Domestic plus exports, excluding inter-group volumes Sep 04 Change % SABMiller plc 2005 41
Operating results EBITA contribution* Sep 05 Sep 04 North America 22% South Africa 31% Central America 2% Africa & Asia 16% Europe 29% South Africa 30% Africa & Asia 15% North America 26% Europe 26% Central America 3% * Excluding Corporate and exceptional items SABMiller plc 2005 42
Cash flow Sep 05 US$m Sep 04 US$m EBITDA 1,418 1,278 Working capital (129) (16) Servicing of finance (82) (70) Taxation (394) (272) Capital expenditure (404) (334) Operating free cash flow* 409 586 Minority dividends (63) (76) Free cash flow 346 510 * Excluding dividends from associates and proceeds from sale of fixed assets and investments SABMiller plc 2005 43
Interest analysis Net interest payable Sep 05 US$m Sep 04 US$m Group 77 78 Associates 8 13 Total 85 91 EBITDA interest cover* 18.4 16.4 Average interest rate - % 5.6 5.1 * Excluding associates SABMiller plc 2005 44
Financial structure Interest bearing debt Sep 05 Sep 04 Average interest rate (gross debt) - % 5.6 5.1 Net debt currency profile US dollars 55% 101% Euro 10% 10% SA Rand 18% -21% Central Europe 3% 7% Africa and Asia & Central America 14% 3% SABMiller plc 2005 45
Financial & commercial rand / US$:rate (CPI differentials) month-on-month basis 1.6 1.4 Base 1 = 1990 1.2 1.0 0.8 0.6 0.4 90 91 93 95 97 99 01 03 05 Source: Bloomberg, JPMorgan SABMiller plc 2005 46
Exchange rates Closing rates currency vs. US$ 30 Sep 05 31 Mar 05 30 Sep 04 Euro 0.8312 0.7715 0.8046 Poland 3.27 3.16 3.51 Czech Republic 24.62 23.20 25.40 Hungary 207.50 191.15 198.87 Russia 28.50 27.88 29.23 India 43.98 43.71 45.95 China 8.08 8.28 8.28 Tanzania 1,135 1,105 1,061 Botswana 5.39 4.59 4.72 Mozambique 24,686 20,150 21,080 Kenya 74.20 74.80 81.15 Honduras 18.86 18.78 18.44 South Africa 6.37 6.26 6.47 SABMiller plc 2005 47