HY 2002 RESULTS
Summary Solid underlying growth of the business Investments in sustainable long-term growth On track to achieve our financial targets 1
Key Highlights HY 2002 (IAS) (1)(2) Post- Restructuring Pre- Restructuring HY 2001 (3) (IAS) % Change (4) EBITDA 569m 630m 516m +22% EPS Before Goodwill (5) 0.52 0.62 0.54 +15% 2 (1) Excluding Carling (2) Including 19m cost of Canadian lock-out & related pension costs (3) Excluding Bass UK (Carling, Scotland, Northern Ireland) (4) Change between HY 2001 and HY2002 pre-restructuring (5) Calculated using the average outstanding number of shares
'The World's Local Brewer' Vision Realised Through Parallel Execution of Four Strategic Themes 1 Strategic themes Building and leveraging local platforms drive profitable growth Rationale Local brands and access to economic scale in distribution are key value drivers in most geographical markets 2 Broad brand portfolio allows access to all segments A broad portfolio of brands can be tailored to local needs and requirements which enables value capture in all segments of the beer market 3 Superior risk-return profile with balance of mature and developing markets Stability of mature market cash flows allows flexibility for investment in higher-risk but higher growth areas 4 Market consolidation secures position and creates value Consolidation is a major driver of value creation through scale economies and market leadership 3
Continuous Shareholder Value Creation Achieving operational excellence requires Re-engineering of existing operations Obtaining integration benefits of previous acquisitions Investing in business to successfully achieve change Operational Excellence Sustained Organic Growth Continuous shareholder value creation Acquisition 4
Presentation Outline 1. HY 2002 Results 2. Investing For Sustainable Growth 3. Integrating Beck & Co 4. Outlook & Conclusion 5
Description of Scope Changes Scope Inclusions Bass Scotland / Northern Ireland (Jan 02) Diebels (Sep 01) Beck & Co (Feb 02) Scope Exclusions Heineken UK contract (Jan 02) Service fee changes (Dec 01) Restructuring Charge UK distribution restructuring charge shown separately for group and Western Europe Bass UK / Carling Carling included in reported HY 02 numbers for 5 weeks (sold Feb 02) Bass UK excluded from HY 01 and Carling excluded from HY 02 6
Breakdown of HY02 Results HY01 Organic Foreign Growth Scope (2) Exchange HY 02 Volume (1) Hl million 34.8 +0.8 +5.3-40.9 +2.3% +15.2% +17.5% Net Turnover million 2,784 +115 +421 +12 3,332 +4.1% +15.1% +0.4% +19.7% Net Turnover/ HlH per Hl 80.0 81.5 7 (1) Excluding FEMSA Cerveza (2) Inclusions: Bass Scotland / Northern Ireland, Diebels and Beck & Co Exclusions: Heineken UK contract and service fee changes
Continued Delivery of Underlying Organic Growth HY 01 (1) Organic Foreign Scope HY 02 Growth (2) (3) Exchange (1) Restructuring Charge (4) HY 02 (1) EBITDA million +96 +1 630 516 +17-61 569 +3.3% +18.6% +0.2% +22.1% +10.3% EBIT million 272 +4 +38-314 -61 253 +1.5% +13.9% +15.4% -7.0% 8 (1) Excluding: Bass UK (HY01) and Carling (HY02) (2) Includes 19m cost of Canadian lock-out (3) Inclusions: Bass Scotland / Northern Ireland, Diebels and Beck & Co. Exclusions: Heineken UK contract and service fee changes (4) UK distribution restructuring charge
Continued Delivery of Underlying Organic Growth Organic HY 01 (1) Foreign HY 02 Growth Scope (2) Exchange (1) Restructuring Charge (3) HY 02 (1) EBITDA million 516 +36 +7.0% +96 +1 649-61 588 +18.6% +0.2% +25.8% +14.0% excluding effect of Canadian lock-out EBIT million 272 +23 +8.5% +38 +14.0% - 333 +22.4% -61 272 9 (1) Excluding: Bass UK (HY01) and Carling (HY02) (2) Inclusions: Bass Scotland / Northern Ireland, and Beck & Co. Exclusions: Heineken UK contract and service fee changes (3) UK distribution restructuring charge
Contribution by Region - Western Europe - Americas - Emerging Markets - Parent / Export Total HY 02 EBITDA (1) million 277 175 153 25 630 HY 02 EBITDA (1) Split, % 44% 28% 24% 4% 100% 10 (1) Excluding UK distribution restructuring charge
Breakdown of Growth in Western Europe Organic Scope Growth (2) Organic FX HY 01 (1) Growth Scope(2) FX HY 02 (1) Restr. HY 01 (1) HY 02 (1) Chrg. (3) HY 02 (1) Volume Million Hl 11.9 +0.2 +4.7-16.8 EBITDA million 193 +18 +66 277-61 - 216 +1.7% +39.5% +41.2% +34.2% +43.5% +9.3% +11.9% Net Turnover million 1,241 +29 +324 +5 1,599 EBIT million 96 +21 +10-127 -61 66 +2.3% +26.1% +0.4% +28.8% +21.9% +10.4% -31.3% +32.3% 11 (1) Excluding: Bass UK (HY 01) and Carling (HY 02) (2) Inclusions: Bass Scotland / Northern Ireland, Diebels and Beck & Co Exclusions: Heineken UK contract and service fee changes (3) UK distribution restructuring charge
Western Europe Market share stable or growing in all countries Continued strong value growth of Stella Artois in the UK (+9.4%) Increase of Jupiler crate market share Pleasing developments in Germany 12
Breakdown of Growth in Americas HY 01 Organic Growth Scope (2) FX HY 02 HY 01 Organic Growth (3) Scope (2) FX HY 02 Restr. Chrg HY 02 (1) Volume Million Hl 6.9 +0.2 +0.7-7.8 EBITDA million 175 +2-2 175-175 - +2.9% +10.1% +13.0% +1.1% -1.1% Net Turnover million 848 +47 +86-5 976 EBIT million +1-1 -1 116-116 +5.5% +10.1% -0.5% +15.1% +0.9% -0.9% -0.9% -0.9% -0.9% 117 13 (1) Excluding FEMSA Cerveza (2) Inclusion: Beck & Co, exclusion service fees (3) Includes 19m cost of Canadian lock-out
Breakdown of Growth in Americas HY 01 Organic Growth Scope (2) FX HY 02 HY 01 Organic Growth (3) Scope (2) FX HY 02 Restr. Chrg HY 02 Volume (1) Million Hl 6.9 +0.2 +0.7-7.8 EBITDA million 175 +21 - -2 194-194 +2.9% +10.1% +13.0% +12.0% -1.1% +10.9% excluding effect of Canadian lock-out Net Turnover million 848 +47 +86-5 976 EBIT million -1-1 135 +5.5% +10.1% -0.5% +15.1% +17.1% -0.9% -0.9% +15.3% 117 +20-135 14 (1) Excluding FEMSA Cerveza (2) Inclusion: Beck & Co, exclusion service fees
Americas US Import depletions up 7.7% Repositioning Rolling Rock Canada Pricing environment remains strong Overall market share stable Oland Specialty Beer Company - 20% organic volume growth Cuba 15
Breakdown of Emerging Markets Growth HY 01 Organic Growth Scope FX HY 02 HY 01 Organic Growth Scope (1) FX HY 02 Volume Million Hl 14.9 +0.4 - - 15.3 EBITDA million 146 +6-2 +3 153 +2.7% +2.7% +4.1% -1.4% +2.1% +4.8% Net Turnover million 629 +41 - +11 681 EBIT million +6.5% +1.8% +8.3% -7.9% -3.2% +3.2% -7.9% 63-5 -2 +2 58 16 (1) Exclusion: Service fee changes
Central Europe Czech Republic, Croatia and Hungary performance above expectations with a strong core segment Romania and Bulgaria: tough economic environment Continued loss of market share to value brands Montenegro performance impacted by politically driven strike 17
Eastern Europe Russia Market Volume Jun-01 vs. Jun-02 Market Growth Cans PET +600,000 +392,000 5x +24% Two new PET lines and can line in Klin operational as of June Acceleration of 2003 CAPEX Implementation of cross-brewing Ukraine Growth market with potential Strong performance 18
Asia South Korea Industry growth of 5% YTD Cass reached 19.7% market share Rejuvenation of OB brand Strong financial performance 19
Return on Invested Capital by Region June 2002 Post Scope Invested Capital June 2001 ROIC (1) June 2002 Pre-Scope ROIC June 2002 Post Scope ROIC (1) - Western Europe 2,305 18.7% 19.7% 8.4% - Americas (2) 2,028 13.2% 15.3% 15.3% - Emerging Markets 1,736 7.9% 9.1% 9.1% - Parent / Export 541-4.9% 0.9% 4.8% Total 6,610 10.1% 13.2% 10.4% 20 (1) As reported (2) Including investment in FEMSA Cerveza
EPS Progression HY 00 (1) HY 01 (2) HY 02 (2) EPS (excluding goodwill) 0.46 0.56 0.51 EPS (excluding goodwill, Bass UK/Carling) 0.46 0.54 0.52 EPS (excluding goodwill, Bass UK / Carling, restructuring) 0.46 0.54 +17% 0.62 +15% 1.44 % 21 (1) Belgian GAAP (2) IAS
Presentation Outline 1. HY 2002 Results 2. Investing For Sustainable Growth 3. Integrating Beck & Co 4. Outlook & Conclusion 22
Investing for Sustainable Growth New Long Range Plan: 2003 2005 New variable compensation Re-engineering: optimise global integration Build a platform for sustainable long-term, top and bottom-line growth 23
Challenging the Status Quo Re-engineering actions taken to date UK Distribution Castlemaine XXXX / Murphy s Canadian workforce negotiations Brascan settlement Further projects to follow 24
Financial Impact of Re-engineering engineering UK Distribution One off charge 25m Cash / 37.5m ( 61m) EBIT Impact for Interbrew ( m) Cash EBIT 2005 onward +10 +9 Canada Negative EBIT impact of 19m in HY 02 Avoided cost increase of 93m in FY 03 and going forward Brascan Cash in/minimal impact on P&L 25
Invested Capital Increased CAPEX Russia: Cuba: South Korea: Packaging + Capacity Capacity + Distribution Investment in brands HY 02 CAPEX 229m, versus HY 01 CAPEX 227m Link between CAPEX and organic growth 26
Investing in Growth Markets Top High Growth Beer Markets (1) % of Global Growth 48.4 10.1 Interbrew presence Well-established presence in high growth markets Continuing investment program 6.7 5.9 China 3.0 3.0 2.6 China Brazil Mexico Russia USA Poland Ukraine 27 (1) Canadean, Fastest Growing Top 20 Beer Markets (2001A-2006F)
Presentation Outline 1. HY 2002 Results 2. Investing For Sustainable Growth 3. Integrating Beck & Co 4. Outlook & Conclusion 28
Integrating Beck & Co Detailed financials for Beck s at year end 21 integration teams with full staff commitment Focus on core business Germany Integration of Beck & Diebels completed in 78 working days 29
Beck s: Germany (1) Sales Volume: Beck s (Total Brand) Sales Volume: Beck s (Rtn. Bottles) 2,000 1,900 1,800 1,700 1,600 1,500 1,400 6.7% Price Increase executed 1-Jun-00 8.5% Second Price Increase 1-Jul-02 Announcement of Beck s acquisition 6-Aug-01 1998 1999 2000 2001 2002 560 540 520 500 480 460 440 420 400 380 5.0% Price Increase executed 1-Jun- 00 5.0% Second Price Increase 1-Jul-02 Announcement of Beck s acquisition 6-Aug-01 1998 1999 2000 2001 2002 The new crate 30
Beck s: Germany (2) Fastest Growing Top 10 Brands (1) 17.8% 4.2% 4.2% 2.9% 2.6% 2.0% 1.3% -1.0% -3.4% -3.5% Beck's Krombacher Hasseröder Radeberger Bitburger Veltins Diebels König Jever Warsteiner 31 (1) Inside magazine, HY 02, growth rates of ten largest volume German domestic brands
Beck s: Germany (3) Total Beck s Margin (Indexed to 100) 122 100 100 104 102 97/98 98/99 99/00 00/01 01/02 32
Beck s: Rest of World Canadian licence Total cost of 3.5m over 5 years Wider distribution through Oland Specialty Beer Company EFES agreement in Turkey Export business - strong performance 33
Beck s: Americas Update on legal situation Currently operating independently of Labatt USA Uncertainty over integration has had some impact on sales performance Encouraging recent trading trends Marketing initiatives to reinvigorate brand for US consumers 34
Presentation Outline 1. HY 2002 Results 2. Investing For Sustainable Growth 3. Integrating Beck & Co 4. Outlook & Conclusion 35
Current Trading Conditions Western Europe Americas Emerging Markets 36
Affirming Financial Targets 2000-2004 Double-digit average annual growth in EPS before goodwill - irrespective of scope changes FY 00 FY 01 FY 02 EPS (Reported) 1.21 1.44 +19% On target to achieve '00 - '04 goal 37
Questions & Answers
HY 2002 RESULTS Annexes
FX Main currencies CAD, USD, GBP, RUB, KRW Translation risks Local currency income & costs Minimise equity in local currency Leverage in local currency Transaction risks Operational exposure: 100% hedged 12 months Intra company financial exposure: 100% hedged 6 months 50% hedged next 6 months 40
The Full Story - Tecate Beer Volume Growth FEMSA Labatt USA 14,000 12,000 Depletion Volume Cases (000s) 10,000 8,000 6,000 4,000 2,000 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Est. 41 (1) Started to export in 1994
The Full Story - Dos Equis Beer Volume Growth FEMSA Labatt USA 6,000 5,000 Depletion Volume Cases (000s) 4,000 3,000 2,000 1,000 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Est. 42
Sound Financial Structure HY 02 HY 01 Net Financial Debt 2741 2,741m 3,158m Net Financial Debt / EBITDA 4.8 4.8 4.8 Cash Interest Coverage 4.7 4.7 4.8 43