Transcript United Breweries Limited quarterly briefing – Apr 06

United Breweries Limited
ICICI Investors Conference
Singapore
March 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 6% giving impetus to
growth
• Substantial increase in the disposable
income in the age group of 20 to 30 years
Indian Demographics –
favorable to growth in beer consumption
• Current population 1.1 billion
• Over 50% of the population is below the age of
25 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 – excellent
opportunity for growth in beer consumption over
the next decade and half.
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.
• State governments like Punjab, Rajasthan,
Haryana & Chandigarh have in recent past
made substantial changes in the previous
distribution methods making beer more
affordable as well as profitable.
• 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%
Wine
5%
78%
Spirits/
Liquor
8%
21.5%
India
Beer
87%
Emerging
Markets
Consumption Per Capita
83 litres
23 litres
24 litres
12 litres
0.7 litres
India
Indonesia
China
World Average
USA
Industry Growth
30%
25%
20%
15%
10%
5%
5 Year
CAGR
2005
2006
2007
Beer Segmentation
+23.1%
Dec 05
+35.4%
Dec 06
MILD
Dec 05
STRONG
Dec 06
Market Consolidation
UBL
SAB Miller
Mohan Meakins
MSIL
Others
Recent new Entrants:
APB
A–B
Carslberg
Circa 83%
of market
UBL performance in the Indian
Beer Story
Volume Growth –
Combined Business
70
60
50
40
30
Volumes in
Mio cases
20
10
0
2003- 2004- 2005- Est
04
05
06 200607
Quarterly - EBITDA trend
60
50
40
2004
2005
2006
30
20
10
0
June
Sept
Dec
March
Key Brands
22m
20m
3m
1.5m
Kingfisher Sandpiper
Mild
1.8m
UB Export
1.8m
Kingfisher Zingaro
Bullet
Strong
Kingfisher Mild = No 1 top selling mild beer
Kingfisher Strong = No 1 top selling strong beer
Kingfisher Strong = No 1 top selling beer in India
Market Share
66%
Mild Beer
Strong Beer
38%
Market position by state:
UBL is No.1 in 8 out of the top 10 state markets
% India
Val.
UBL
Position
Maharashtra
16
No.1
Tamil Nadu
13
No.1
Andra Pradesh
13
No.2
Karnataka
10
No.1
Mumbai
8
No.1
Rajasthan
7
No.1
Uttar Pradesh
6
No.2
Delhi
5
No.1
Madhya Pradesh
3
No.1
Kerala
2
No.1
Shareholder Return
05/06
06/07*
Share price Rs.323 to Rs.1495
462%
Share price Rs.149.5 to Rs.268.5
76%
* TSR to date, March 07
Legal Structure
S&N
UBHL
37.5%
37.5%
UBL
50%
50%
Public
25.0%
UBL & MAL Separate Legal entities
UBL subsidiaries – KBDL and its 2 subsidiaries
which would merge into UBL effective 1st Apr’06
Millennium
Alcobev Ltd
MAL has 3 Subsidiaries namely – MBIL, Empee and UMBL
Board Of Directors
• 2 x UB Group (VJM Chairman)
• 2xS&N
• 2 x Executive Directors (CEO & CFO)
• 3 x Independent Directors
Latest financials
December 2006
Results Dec 06
United Breweries Limited
In rupees crore
Nine months ended
31.12.2006 31.12.2005
Unaudited #
Net Sales/Income from operations
Other Income
Total Income
Expenditure
Cost of production
Advertisement & Sales Promotion
Other operating Costs
601.10
9.59
610.70
392.88
10.92
403.80
283.05
115.48
93.69
182.76
82.22
53.24
PBIDT
Margin on sales
118.48
19.40%
85.57
21.19%
PBIDT
118.48
85.57
Finance charges
17.48
14.88
Depreciation
16.00
8.55
Profit Before Non recurring items &Taxation
85.01
62.14
-
(13.18)
Taxation
Net Profit
(31.58)
53.43
(21.81)
27.14
COMBINED BUSINESS
PBIDT
Finance charges
Depreciation
Profit Before Non recurring items &Taxation
141.02
40.89
31.22
68.91
89.69
36.37
19.81
33.51
Non Recurring items
51%
38%
37%
97%
57%
106%
# Dec 06 results include ABDL + MBDL
Comparative results for Dec 05 Income Rs. 453.8Cr EBITDA Rs. 88.57 Cr.
EBITDA Dec 05 Vs Dec 06
Revenue effect in Rs. Crore
Decrease
in Interest
Income,
(1.33)
Increase
on
realisation
, 80.88
Vol.
driven
increase,
52.17
Cost effect in Rs. Crore
Higher
price of
Inputs,
(14.92)
Higher
Ad
spends,
(40.43)
Higher
operating
costs,
(11.46)
Revevue Effect
Vol. driven increase
Increase on realisation
Decrease in Interest Income
85.57
Increase
other
Selling
Costs,
(21.82)
Higher
staff
costs,
(10.18)
Cost Effect
Rs. crore Rs. crore
52.17
(14.92) Higher price of Inputs
80.88
(21.82) Increase other Selling Costs
(1.33)
(10.18) Higher staff costs
(11.46) Higher operating costs
(40.43) Higher brand spends
131.72
(98.81)
131.72
(98.81) 118.48
Summary Balance Sheet
UBL
Rupees Million
Sources
Share Holders Funds
Loan Funds
Total Sources
Application
Fixed Assets
Investments
Net Current Assets
Total Application
As at
As at
As at COMBINED BUSINESS
31.12.06
31.12.05
31.3.06
31.12.06
31.3.06
5,590
3,988
9,578
3,892
2,035
5,927
5,072
2,534
7,606
3,516
6,613
10,129
3,159
5,586
8,746
2,823
2,196
4,559
9,578
1,382
1,820
2,725
5,927
2,104
591
4,911
7,606
4,341
1,605
4,182
10,129
3,376
17
5,352
8,746
Current Debt Profile
UNITED BREWERIES LIMITED
Debt Profile
Amounts in rupees million
Unaudited
Audited
Unaudited
31.12.06
31.3.06
31.12.05
Long Term Debt
Working Capital funding
3,113
875
1,762
772
1,808
227
Total
3,988
2,534
2,035
Debt in Subsidiary
Debt in Joint Venture - UBL guarantee
188
1,866
288
2,500
2,500
Grand Total
6,043
5,322
4,535
Key Ratios
UBL
As at
As at
31.12.06
31.12.05
31.3.06
31.12.06
31.3.06
Debt
3,988
2,035
2,534
6,613
5,586
Net Worth
5,590
3,892
5,072
3,516
3,159
GEARING
0.71
0.52
0.50
1.88
PBIDT
1,185
856
1,371
1,410
1,487
Interest
175
149
239
409
529
INTEREST COVER
6.78
5.75
5.74
3.45
2.81
Capital Employed *
9,578
5,927
7,606
10,129
8,746
Rupees Million
ROCE
As at COMBINED BUSINESS
12%
14%
18%
14%
17%
for 3 qtrs for 3 qtrs
for the year for 3 qtrs for the year
EPS
2.47
12.10
4.67
EPS for 3 qtrs ended 31.12.06 is on a face value of Re 1.
Average Realization and Cost of sales
Sales Realization Cost Index
NSR
120
100
COS
100
105
106
105
105
61
57
59
59
59
80
60
40
20
0
31/03/2005 31/03/2006 June qtr 31- Sept qtr Dec qtr 3103-2007 31-03-2007 03-2007
Outlook
•
•
•
•
GDP growing at healthier rate
Continued growth in disposable income
Encouraging demographics for over a decade
Anticipated liberalization of policies & duty
structures
• Industry consolidated with high entry barrier
• UBL is in advantageous position to capitalize on
opportunities