Earnings P r e s e n t a t i o n January 2018
Disclaimer Information contained in this presentation is subject to change without prior notice. Its accuracy is not guaranteed and it may not contain all material information related to the company. Neither SADAFCO nor its associates make any representation regarding, and assume no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein. Nothing in this presentation shall form the basis of any contract or commitment whatsoever. This presentation is furnished to you solely for your information. You may not redistribute it to any other person. This presentation contains forward-looking statements that are made on the basis of current knowledge and assumptions. Various factors could cause future results, performance or events to differ materially from those mentioned in the presentation. 2
Our Vision, Mission & Values VISION To be the Brand of Choice MISSION Develop, produce and market a range of nutritious food propositions for all age groups and create maximum shareholder value through teamwork 3
Business Highlights Sales 3.2% YoY 9M 2017/18 : SAR1,314mn 9M 2016/17 : SAR1,357mn 9M 2017/18 : SAR210mn 9M 2016/17 : SAR230mn Net Profit 8.7% YoY Cash Flow Cash and Deposit Balances 9M 2017/18 : SAR472mn 9M 2016/17 : SAR432mn Above balance after dividend payment of SAR195mn Announced the distribution of an interim dividend of SAR2/ share in Nov 17 Construction of new Tabuk Depot completed New Tabuk Depot Recent Developments Capital Expenditure 9M 2017/18 : SAR95mn 9M 2016/17 : SAR62mn 4
90 80 70 60 50 40 30 20 10 0 190 180 170 160 150 140 130 120 110 100 28% 23% 18% 13% 8% 3% 80% 70% 60% 50% 40% 30% 20% 10% 0% Sales & Profitability Sales Gross Profit 436 447 453 441 420 36% 41% 39% 39% 159 185 175 171 149 36% Q3'16/17 Q4'16/17 Q1'17/18 Q2'17/18 Q3'17/18 Q3'16/17 Q4'16/17 Q1'17/18 Q2'17/18 Q3'17/18 As % of Net Sales Net Profit 16% 16% 17% 17% 14% 68 73 77 75 58 Q3'16/17 Q4'16/17 Q1'17/18 Q2'17/18 Q3'17/18 As % of Net Sales 5
300 250 200 150 100 50 0 40% 35% 30% 25% 20% 15% 10% 5% 0% Strong Balance Sheet Steady Asset Base build by Internally generated funds 1,547 1,642 1,644 1,713 1,712 1,189 1,263 1,209 1,284 1,277 Q3'16/17 FY'16/17 Q1'17/18 Q2'17/18 Q3'17/18 Q3'16/17 FY'16/17 Q1'17/18 Q2'17/18 Q3'17/18 Shareholders' Equity Working Capital* 15% 13% 11% 14% 15% 286 231 204 255 267 Q3'16/17 FY'16/17 Q1'17/18 Q2'17/18 Q3'17/18 Working Capital As % of Net Sales** Note: *Working Capital calculated as Current Assets net of Current Liabilities. Current Assets: Accounts receivable + Inventories + Deposits, prepayments & other current assets Current Liabilities: Accounts payable + Due to related parties + Accrued zakat + Dividend payable + Accruals & other current liabilities **Rolling 12-months net sales 6
Cash Flow Summary Cash Flow Bridge for rolling 12-months as of 30 December, 2017 750 650 550 366 131 195 450 350 250 432 472 150 50 Free Cash Flow = SAR 239mn -50 Cash and Cash Equivalents (30 Dec 2016) Net cash from operating activities Purchase of Property, Plant and Equipment (PP&E) Dividends Paid Cash and Cash Equivalents (30 Dec 2017) Distributed an Interim Dividend of SAR 2 per share in Dec 17 in addition to the Annual Dividend Note: Does not depict other cash outflow of ~SAR3.5mn which includes Board of Director remuneration, noncontrolling interest and effect of exchange rate fluctuations 7
Product Portfolio UHT Milk Milk Powder Cheese Products Frozen Tomato Products Others UHT Milk Whole, Low Fat, Skimmed, Gold Milk Flavored Milk Date Milk Milk Powder Instant Feta Cheese Processed Cheese Triangles Ice cream French Fries Butter Ketchup Tomato paste Arabic Coffee Laban Jump Crispy Cream Juices Growing-up EVAP Majestique Soy Drink 8
Shareholding Structure Shareholding (as of 15 January 2018) Public & Others 59.9% 40.1% Qurain Petrochemicals Industries (QPIC) is the largest shareholder of SADAFCO QPIC, incorporated in 2004, is a private sector holding company in the energy, petrochemical, food and related sectors QPIC is an associate of KIPCO group, which is one of the biggest diversified holding companies in the Middle East and North Africa. KIPCO Group has assets of around USD 32 billion under management or control KIPCO and QPIC both are listed on the Kuwait Stock Exchange Source: Tadawul Stock Exchange 9
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 SAR Shareholders Returns Share Price Performance 220 180 140 100 60 20 52 Week High 135.0 (SAR) SAR 123.0 52 Week Low 113.0 (SAR) Market Cap (SAR Mn): 4,160 (15 Jan 2018) SAR 128.0 10 8 6 4 2 0 Trading Volume, Mn Shares SASE Index SADAFCO Volume (Mn) Source: Bloomberg; SAR Saudi Riyal; SASE Index (Rebased to SAR 123.0 on 03 January 2015) Consistent Dividends* SAR per share 4.0 4.0 3.5 14/15 15/16 16/17 Declared Dividend per share Note: *Announced the distribution of an interim dividend of SAR2/ share in Nov 17 Compounded Annual Return # of 6.0% over the last 3 years Note: # Annualized Return calculated as sum of share price appreciation/depreciation and dividends paid during the period ending 15 January 2018, assuming no reinvestment of dividends 10
Going Forward The results for the quarter and nine months continue to reflect SADAFCO S strategy to make profitable sales, and to protect both our market share and strong financial position. The deflationary trend in dairy and food prices triggered by irrational discounting by the competition, continued further reductions in the consumer base along with increase in energy & manpower costs, will put additional pressure on future growth and margins. However, despite the overall market conditions, we have managed to deliver a robust net margin of ~16% for the nine months. Given our strong financial position we are poised to handle these challenges effectively 11