Transcript United Breweries Limited quarterly briefing – Apr 06
United Breweries Limited
Presentation November 2007
India and the Beer Industry
Indian Economy
• The current year growth rate is 9% • The growth is largely propelled by local consumption hence lesser prone to global changes.
• Inflation currently at (5.7- 7.9)% (CPI) giving impetus to growth –
Source RBI Oct 13, 2007
• Substantial increase in the disposable income in the age group of 20 to 30 years
Increase in disposal Income
1989-90 2001-02 2009-10 0% 50% Low (< Rs.45 K) Middle (Rs. 45K -Rs.
90K) High (> Rs. 90K) 100%
Source: Motilal Oswal Securities
Indian Demographics –
favorable to growth in beer consumption • Current population 1.1 billion • Over 50% of the population is below the age of 20 years • The demographics to remain almost unchanged till the year 2020 •Core target market is 18-30 year olds • As initiation to alcohol consumption is through low alcohol beverages like beer the next decade and half.
– excellent opportunity for growth in beer consumption over
Population demographics
2001 70.8
485 455 > 60 years 20-59 0-19 2011 94.2
636 447 0% 20%
Figures million
40% 60% 80% 100%
Source: Motilal Oswal Securities
Beer Industry in India
• Policies & Regulations are driven by State Government • Highly regulated with restriction in movement between states • 65% of the Indian market is state controlled – Distribution by Govt. Corporations, implications upon pricing • Advertising strictly prohibited, advantage for existing players, major barrier to entry
Beer Industry in India contd.
• Government corporations are now approachable and not averse to make changes • There have been recent recommendations by some governing bodies to de link beer from spirit and have a common national duty structure much lower than the current duty levels
Beer Industry in India contd
AFFORDABILITY
• Duty not set according to alcohol content • Highest duty in the world • Expensive alcoholic beverage
AVAILABILITY
• 55,000 licensed outlets across the country • 1 per 20,000 people • In UK 1 per 350 people
Beer is not the alcoholic beverage of the common man
Alcohol Consumption
<0.5% 78% Wine 5% Spirits/ Liquor 8% India 21.5% Beer 87% Emerging Markets
Per Capita Beer Consumption
140 120 100 80 60 40 20 0 0.9
In di a In do ne si a 12 22 24 59 C hi na W or ld A vg R us si a
Country
U S A 82 100 125 UK G er m an y
Key performance highlights H1 2007-08
• 13.8% volume growth in UBL while the combined business grew at 14.3% as against an industry growth of 12.6% • Kingfisher growth - premium 5.4%, strong 23.9% • EBITDA at the half year end 112 Cr. as against 87 Cr., a growth of 29% • Combined EBITDA at the half year end 143 Cr. as against Cr.110, a growth of 30%
Operational performance
+ 12.6%
Volume Growth – H1
+ 16.6% + 14.3% + 13.8% Industry Combined Business UBL Only MABL Only
Change in Consumption pattern
30 20 10 0 70 60 50 40 Mild Beer % Strong Beer % • Currently all international brands known in India are mild beers & most of the new launches have been in this category, which has been declining
25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2005-06
Kingfisher Performance
Kingfisher premium - % growth
Industry-Mild KF premium 2006-07 2007-08 Est.
50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2005-06
Kingfisher Strong - % growth
2006-07 2007-08 Est.
Industry-Strong KF Strong
UBL V’s SABM Market Share
47% 33%
UBL SABM March 07
Financial Performance
Results September 07 United Breweries Limited In rupees crore Year ended 30.9.2007
30.9.2006
Audited Incl. of KBD Net Sales/Income from operations Other Income Total Income Expenditure Cost of production Advertisement & Sales Promotion Other operating Costs 579.66
13.79
593.45
415.12
5.37
420.49
301.88
144.72
34.61
193.70
114.31
25.51
41% 464.59
PBIDT Margin on sales PBIDT Finance charges Depreciation Profit Before Non recurring items &Taxation Non Recurring items Taxation Net Profit 112.23
19.36% 112.23
86.97
20.95% 29% 86.97
19.02
26.02
67.19
12.00
10.15
64.82
4% 88.25
18.99% (25.01) 42.18
(24.09) 40.73
4% COMBINED BUSINESS PBIDT Finance charges Depreciation Profit Before Non recurring items &Taxation 143.31
31.50
38.05
73.76
109.75 31% 27.67
20.29
61.79
19% Margin on sales in the published financials not comparable as Sept. 06 does not include KBDL a 100% subsidiary
Performance analysis
• An increase in the operating margins despite cost push • Despite a 29% growth in operating margins PBT growth of only 4% on account of interest & depreciation – Rights issue approved by the Board expected in the first half of the next financial year • Healthy growth in operating margins of 31% in the combined business
Summary Balance Sheet
UNITED BREWERIES LIMITED BALANCE SHEET Amounts in rupees million
Sources Share Holders Funds Loan Funds
Total Sources
Application Fixed Assets Investments Net Current Assets
Total Application 30.9.07
5,998 4,075
10,073
5,583 4,762
10,344
4,012 7,185
11,197
3,498 7,766
11,263 As at
6,172 591 3,310
10,073 As at COMBINED BUSINESS 31.3.07
5,262 591 4,491
10,344 30.9.07
7,462 1 3,733
11,197 31.3.07
6,561 1 4,702
11,263
Ratios
UNITED BREWERIES LIMITED
Rupees Million
Debt As at 30.9.07
As at COMBINED BUSINESS 31.3.07
30.9.07
31.3.07
4,075 4,762 7,185 7,766 Net Worth GEARING PBIDT Interest INTEREST COVER 5,998 0.68
112 19 5.90
5,583 0.85
162 28 5.77
4,012 1.79
143 31 4.55
3,498 2.22
186 54 3.47