SABMiller plc Dresdner Kleinwort Consumer Staples Conference

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SABMiller plc Dresdner Kleinwort Consumer Staples Conference Powered By Docstoc
					SABMiller plc
Dresdner Kleinwort
Consumer Staples
Conference

Malcolm Wyman
Chief Financial Officer
3 April 2008
Agenda
 Macroeconomic context

 Leveraging growth opportunities

 Investing for the future

 Q&A




                                   2
                SABMiller overview
Key facts

      Sales across 60 countries*
      – top 10 > 80% of EBITA
      #1 or #2 brewer > 90% of markets**
      Revenue and EBITA growth*** average
      8% and 15%, respectively, over
      F03-F07
      – average annual margin growth
         of 80bps
      A leading Coke bottler




*Based on number of countries in which SABMiller plc has a brewing presence or distribution arrangement (including Castel)
**Based on number of countries in which SABMiller plc has a brewing presence (including Castel)
*** Organic, constant currency

                                                                                                                             3
            SABMiller overview
Strong global footprint across six continents




   Regions where SABMiller operates, or has a major distribution agreement (over 100,000 hectolitres) or recent start-up operations
   Regions covered by our strategic partner Castel


                                                                                                                                      4
                 SABMiller overview
Increasingly geographically diversified business

                          2005 EBITA                                                          2007 EBITA
                                        Latin America
                                        4%
                                                                               South Africa                Latin America
                                                   North
                                                                                      30%                  24%
                                                   America
                                                   20%

South Africa
       42%                                                                                                      North
                                                                                                                America
                                                            Europe                                              11%
                                                             19%
                                                                                    Europe             Africa
                               Africa                                                22%              & Asia
                               & Asia                                                                   13%
                               15%

2007 is twelve months to September 2007
EBITA is pre-goodwill amortisation, excluding central admin and exceptional items

                                                                                                                           5
                  SABMiller overview
Superior growth
                                                                                            CAGR
  180
                     Lager volume                      Group revenue       EBITA
                                                                                             15%

  160



  140
                                                                                             8%

                                                                                             6%
  120



  100
                     2003                       2004               2005            2006   2007
                                                            Financial year ended
F03 = 100, growth – organic volumes; organic constant currency


                                                                                                   6
Macroeconomic context
               Economic backdrop
 Greater resilience from emerging markets
 Five year real GDP % growth rate average 2008-2012E
 10%
   9%
   8%
   7%
   6%
   5%
   4%
   3%
   2%
   1%
   0%
              US   Colombia Poland   South    Russia   Peru Tanzania India   China    World
                                     Africa                                          Average

Source: EIU


                                                                                               8
      Economic backdrop
Greater resilience from emerging markets
 Significant momentum
 Ongoing infrastructure investment
 Demand for commodities continues
 Growing local consumer demand




                                           9
             Commodity cost pressures

Significantly higher malt and hop prices
Malt, $/MT                                           Hops, $/kg
950                                                  700

850                                                  600

750                                                  500

650                                                  400

550                                                  300

450                                                  200

350                                                  100

250                                                    0
      Jun SepDec Mar Jun SepDec Mar Jun SepDec Mar         Jun SepDec Mar Jun SepDec Mar Jun SepDec Mar
      05 05 05 06 06 06 06 07 07 07 07 08                  05 05 05 06 06 06 06 07 07 07 07 08


                                                                                                          10
                   Leveraging scale to contain costs

                                     Global coordination


           Global                Global                     Global                    Global
          Sourcing              Sourcing                  Commodity                 Managers
           Council               Matrix                   Workshops                 & Analysts




              Malt / Barley                Aluminum / Cans                  Glass / Bottles

          Global procurement               Global procurement          Global collaboration from
            lead in Europe                      from US                      South Africa

        Buy over 2 million MT          Buy over 160k MT of            One of world’s largest glass
            malt per year                   aluminum                           buyers

                                                                          Pursuing innovation:
        Second largest brewer
                                       Active hedging policy           lightweighting and bottle
              maltster
                                                                                coating
MT=metric tonnes

                                                                                                     11
                Revenue management
Best in class top line growth*
12%
              Competitor 1                    Competitor 2
10%           Competitor 3                    SABMiller PLC

8%

6%

4%

2%

0%
                  F'04                        F'05                   F'06   F'07   CAGR
-2%


* Organic constant currency revenue growth, company published data

                                                                                          12
           Enhancing value by driving consumers to trade up
Worthmore volume share of portfolio: F03 and YTDF08*

  11%            17%              11%    15%   3%       6%     20%    50%   Worthmore %

                                                                              Worthmore

                                                                              Mainstream




   F03            F08             F03    F08   F03      F08    F03    F08
    Czech Rep                      Tanzania    United States    Honduras

*9 months through December 2007

                                                                                           13
Leveraging growth opportunities
        Growth drivers

Our core strengths will continue to drive our growth
  Creating complete brand portfolios
  Building brands
  Superior execution




        No change to medium term volume growth estimates

                                                           15
          Growth drivers

Creating complete and differentiated brand portfolios

                  Economy    Mainstream       Worthmore

 USA

 Poland

 Tanzania

 Honduras


 South Africa


                                                          16
       Growth drivers

Positive mix through focus on worthmore and innovation

International Worthmore   Local Worthmore




Innovation




                                                         17
       Growth drivers

Elevating performance by focus on superior execution
 Leverage customer and consumer insights
 Strengthen key account/chain store relationships
 Category management to stimulate growth
 360° marketing and activation




                                                       18
       Latin America

Integration largely complete

 Growth in line with guidance
 Integration initiatives implemented
  – Replaced bottle pool
  – Portfolio development – renovation/new brands
  – Restructured route to market
  – Trade investments
 Short term initiatives have increased costs and
 caused disruption
 Benefits yet to accrue; signs indicate on right track;
 beer image lifted




                                                          19
          Europe

Healthy volume growth continues
18%

16%

14%

12%

10%

 8%
                                                                      Volume
 6%                                                                   guidance-
 4%                                                                   mid single
                                                                      digit growth
 2%

 0%
      1QF05   3QF05   1QF06   3QF06   1QF07   3QF07   1QF08   3QF08



                                                                                     20
       Miller

Re-orientating the portfolio to maximise value

   Stoke              Exploit                    Protect
 Low single          High teens           Low to mid single
 digit growth          growth               digit decline




                                                              21
       MillerCoors Joint Venture

A stronger, more competitive US brewer: MillerCoors




       Miller geographic skew

       Coors geographic skew



                                                      22
      Africa

Delivering now

 GDP and disposable income increase
 Low per capita consumption levels vs SA at 59L pc
 Driving affordability
 Developing worthmore opportunity
 Enhancing route to market
 Market leader in 31 countries together with Castel
 Country portfolio approach mitigates risk




                                                      23
      Asia

Long term growth story
 Rapid economic growth
 Market leadership and unique brand in China
 India: strong position, regulatory activism, growing
 in worthmore spurred by Fosters
 Profitability to be driven by improved pricing (China)
 and deregulation (India)
 Continue investment in capacity
 Joint ventures in Australia and Vietnam
  – Australia: attractive premium segment
  – Vietnam: high volume growth market




                                                          24
      South Africa

Rising to the challenge
 Economy remains robust
 Enhanced category – replaced bottle pool
 Mainstream returns to growth
 Development of brand portfolio
  – Hansa Marzen Gold
  – Sarita and Skelter’s
  – Grolsch




                                            25
Investing for the future
 Growing investment in capital expenditure…

  Capital expenditure as a percent of net sales*
    10%

                                                                            9.1%
      9%

                                                                 7.9%
      8%

                                                          7.0%
      7%
                        6.4%
                                                   5.9%
      6%


      5%
                         F'03                      F'04   F'05   F'06           F'07

                               Full year F08 capex outlook is some $2 billion
* Revenue excluding associates less excise taxes

                                                                                       27
With investment ahead of the curve

$1,600m                                                   200%

$1,400m                                           1,351   180%
                                                          160%
$1,200m
                                                          140%
                                          984
$1,000m                                                   120%
 $800m                       738                          100%

 $600m             549                                    80%
          429                                             60%
 $400m
                                                          40%
 $200m                                                    20%
   $0m                                                    0%
          F'03    F'04       F'05         F'06    F'07

                     Capex   Capex/Depreciation


                                                                 28
Investing for future growth
     Capacity
      – Expansion in Poland, Romania, Russia
      – Cali and Ulyanovsk greenfield breweries
      – Over 25mhl of capacity in China in F08
     Category renovation – new packaging
      – SA and LatAm
     S&D investments
      – 26k new fridges in Europe, up +30%*
      – Distribution vehicles in LatAm and SA
     Selected increases in marketing



* Off-trade, F08 to September 2007


                                                  29
      Conclusion


Resilient to global slowdown
Rising input costs offset via revenue management and
efficiencies however margins will be under pressure
Growth drivers remain intact
Continue to invest in the business to ensure our
medium/long term growth




                                                       30
           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.




                                                                                                          31
Q&A