bryggerigruppen a/s (the danish brewery group a/s) q3...
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Bryggerigruppen A/S(The Danish Brewery Group A/S)
Q3 2004
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• Introduction to The Danish Brewery Group• Strategic perspectives• Q3 Results• Shareholder information
Agenda
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Introduction to The Danish Brewery Group
OVERVIEWThe Company
• Second largest brewery business in Scandinavia
• Scandinavia’s leading beer exporter
• Approx. 1,900 employees
• More than 13,000 shareholders
• The only brewery business in Scandinavia to be EMAS-registered (EU’s environmental regulation)
Its Products
• Ceres i a leading brand in Italy (85% market share in thesegment)
• Royal Export is the preferred strong beer in Denmark
• Faxe is the leading import brand in Germany, Poland, andLithuania
• Faxe Kondi is the number 2 soft drink in Denmark
• Vitamalt is the number 3 malt drinks brand in the world
Revenue distribution2004 - 3Q
40%
40%
12%
8%
DenmarkWestern EuropeEastern EuropeOthers
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Introduction to The Danish Brewery Group
VISION AND BUSINESS FOCUS
VisionWe will with increasing profitability create abusiness as one of the leading providers ofbeverages in the Nordic and Baltic countries,and we will develop profitable export markets.
Business Focus• Nordic and Baltic countries: Domestic market• Italy and Germany: Niche strategy• The Caribbean and Africa: Niche strategy (malt)
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i Return on invested capital - ROICAn increase from 8.8% in 2002 to more than 10% in 2004
i Cash flow
Generating a cash flow of more than DKK 200 million after tax per year
i Profit margin
An increase from 9.1% in 2002 to more than 10% in 2004
Strategic perspectives
FINANCIAL TARGETS
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• Acquisition of Tauras, Lithuania1999
• Acquisition of Kalnapilis, Lithuania2001
• Albani and the Group merge• Scandinavian alliance created• Cooperation with Heineken
2002
• Bryggerigruppen A/S (change of name)1992
• Faxe Jyske A/S1989
• V82003
• Merger with holding companies(direct stock exchange listing)
1998
• V8 Next• Acquisition of Cido, Latvia• Acquisition of Lacplesa Alus, Latvia
2004
• Ceres Bryggerierne1856
Introduction to The Danish Brewery Group
HISTORY
Breweries of The Danish Brewery GroupAlbani Bryggerierne, OdenseCeres Bryggerierne, ÅrhusFaxe Bryggeri, FaxeMaribo Bryghus A/S, MariboAB Vilniaus Tauras, LithuaniaAB Kalnapilis, LithuaniaSIA Cido Partikas Grupa, Latvia(Lacplesa Alus A/S, Latvia)
AssociatesBanjul Breweries Limited, GambiaHansa Borg Skandinavisk Holding A/S, FaxeNuuk Imeq A/S, GreenlandSolomon Breweries Limited, Solomon IslandsSt.Vincent Breweries Ltd., The Caribbean
Subsidiaries and Sales CompaniesAktieselskabet Cerekem International LTD., FaxeAlbani Sverige AB, SwedenBrewery Group Denmark AB, SwedenCentre Nordique d'Alimentation EURL, FranceCeres S.p.A., ItalyDanish Interbrew LTD. A/S, FaxeDrinktech Holding AG, SwitzerlandFaxe Getränke-Vertrieb GmbH, GermanyFaxe Kondi A/S, FaxeFaxe Polska Sp. z o. o., PolandFaxe Vandindvinding I/S, FaxeImpec Holding S.A.S, The CaribbeanPeva Poland Sp. z o.o., PolandSupermalt UK Ltd., EnglandThe Danish Brewery Group Inc., USAVitamalt West Africa Ltd, UK
Introduction to The Danish Brewery Group
THE GROUP
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FAXE BRYGGERI
CERES BRYGGERIERNE
ALBANI BRYGGERIERNE
MARIBO BRYGHUS
HANSA BORG BRYGGERIER ASA
AB VILNIAUS TAURAS
AB KALNAPILIS
DENMARK
LITHUANIA
NORWAYSIA CIDO PARTIKAS GRUPA
LATVIA
LACPLESA ALUS A/S
Introduction to The Danish Brewery Group
GROUP STRUCTURE
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Nordic countries
Baltic countries
Africa
The Caribbean
Italy
Germany
Premier league
Canada Poland
England
France
First division
Introduction to The Danish Brewery Group
PREMIER LEAGUE AND FIRST DIVISION
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Strategic perspectives
GOVERNANCE MODELOF THE DANISH BREWERY GROUP
MissionManagementPhilosophy Basic Values Vision
Objectives
Budget
KPI
Strategic and Action Plan
Time Perspective
Long
Short
Concretisation
Overall
Detailed
1. Royal: A new strong national beer
2. Introduction of Heineken in Denmark
3. Closure of brewery in Randers
4. More marketing power
5. Increased focus on product development and innovation
6. Increased focus on staff development
7. Resource optimisation
8. Increased focus on key markets
STATUS 2004
20% of segment
1% market share
Completed
In progress
In progress
In progress
In progress
Focus on marketing
Strategic perspectives
STRATEGIC PLAN V8
1. The Royal brand to be further strengthened
2. Cooperation with Heineken to be expanded
3. Relaunch of Kalnapilis in Lithuania
4. More marketing power
5. Increased focus on product development and innovation
6. Increased focus on staff development
7. Resource optimisation
8. Increased focus on key markets
Continued strong focus on
value creation and profitability
Strategic perspectives
V8 NEXTUPDATE OF THE STRATEGIC PLAN IN 2004
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Strategic Perspectives
WHAT IS NEW IN V8 NEXT?
• Expansion of the Royal-brandObjective: At least 10% market share of the Danish lager segmentwithin 5 years
• Licence production of Heineken in DenmarkObjective: Costs efficiency
• Relaunch of Kalnapilis (Lithuania)Objective: To recapture the position as the market leadingsupplier
• The other strategic elements to be maintained
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Strategic perspectives
V8 SUPPORTS THE TOTAL VALUE CHAIN
Purchase Production Distribution Sales
Closure of brewery inRanders
Increased focus on productdevelopment, innovation, and
more power on marketing
Royal
Heineken
Resource optimisation
Staff development
Sales 3.5 million HL (+13.6%)
Net revenue DKK 2.1 billion (+6.8%)
Operating profit DKK 202.9 million (-6.2%)
EBITDA DKK 358.4 million (+15.5%)
EBIT DKK 202.9 million (+15.2%)
Profit before tax DKK 172.0 million (+11.3%)
Free cash flow DKK 100.4 million (-48.1%)
i Consolidated profit before tax of DKK 172.0 million (compared to DKK 154.5 million for the same period of 2003)
i Net revenue up by 6.8% to DKK 2,145.5 millioni Q1-Q3 characterised by:
4Considerable marketing expenses relating to strategic initiatives under the V8 Next Plan
4Bad summer weather i large parts of Europe4Increased competition and pressure on prices in Northern Europe
i Increasing market shares in Italy, Denmark and Lithuaniai EBIT of DKK 202.9 million compared to DKK 176.2 million in 2003.i Free cash flow amounting to DKK 100.4 million compared to DKK 193.6 million for the
same period of 2003 primarily due to increased packaging investment.i Unchanged expectations for the full year, i.e. profit before tax in the amount of
DKK 235-265 million
Results
HIGHLIGHTS - Q3 2004
i V8 Next Strategic Plan introduced- Royal wins market share- Heineken shows growth- Kalnapilis relaunched- Enhanced marketing efforts in key markets- Resource optimisation programme shows results- Changes in distribution system implemented
i Intensified competition and price pressure in Northern Europe
Results
KEY EVENTS - Q1-3 2004
iDenmark:- Beer segment wins market shares (Royal Pilsner and Classic, COOP)- Soft drinks: Faxe Kondi and Mirinda win market shares
i Italy: Increasing market share in a falling total market
i Lithuania:- Kalnapilis in progress. Total market share (Kalnapilis and Tauras) of 27%- Performance is developing positively
i Latvia:- ”Cido” leading Baltic soft drinks producer acquired- Entered into an agreement re. purchase of 83.5% of the share
capital of the Latvian brewery Lacplesa Alus
Results
KEY EVENTS - Q1-3 2004
DKK million 2004 2003 % change
Net revenueOperating profitEBITNet financialsProfit before taxNet profit
2,146203203-31172118
2,008216176-22155102
+7-6
+15-42+11+16
Profit marginFree cash flow
9.5%100
10.8%194
--48
Results
Q3 2004
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Results
FINANCIAL DEVELOPMENT - Q3, 2000-2004
Net turnover
0
1.000
2.000
3.000
2000 2001 2002 2003 2004
DK
K M
illion
Profit Margin
0
2
4
6
8
10
12
2000 2001 2002 2003 2004
Perc
en
t
Free cash flow
0
100
200
300
2000 2001 2002 2003 2004
DK
K M
illion
2.143
3%
4%
-1%2.005
1%
1.900
1.950
2.000
2.050
2.100
2.150
2.200
9mth 2003 Germany The Caribbean Export Impec Latvia 9mth 2004
DKK
Mill
ion
Results
COMPONENTS OF REVENUE GROWTH - Q3 2004
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1’000 HL 20043Q
20033Q
% change 20041-3Q
20031-3Q
% change
Western Europe 977 900 +8.5 2,607 2,443 +6.7
Eastern Europe 445 187 +138.6 767 501 +53.1
Other markets 62 66 -5.8 175 180 -2.6
Total volumes 1,484 1,153 +28.7 3,549 3,124 +13.6
Results
VOLUMES (BY GEOGRAPHICAL AREA) - Q3 2004
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Denmark, beer18%
Italy24%
Germany12%
UK2%
Eastern Europe9%
The Caribbean4%
Tax Free2%
Others5%
Denmark, soft drinks
24%
Denmark, beer18%
Italy26%
Germany11%
UK2%
Eastern Europe9%
The Caribbean3%
Others5%
Denmark, soft drinks
25%
Tax Free1%
2003 2004
Results
NET TURNOVER Q1-3
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Denmark, beer20%
Italy11%
Germany18%
UK1%
Eastern Europe22%
The Caribbean3%
Tax Free2%
Others5%
Denmark, soft drinks
18%
Denmark, beer20%
Italy12%
Germany18%
UK2%
Eastern Europe16%
The Caribbean3%
Tax Free2%
Others6%
Denmark, soft drinks
21%
2003 2004
Results
Volumes - Q1-3
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Results
PEER GROUP - FINANCIAL PERFORMANCE 2003
Cash conversion ratio
0
2
4
6
8
10
12
BG
Perc
en
t
Profit margin
0
4
8
12
16
BG
Perc
en
t
ROIC
02468
1012141618
BG
Perc
en
t
Top 5 international breweries
Top 5 international breweries
Top 5 international breweries
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Results
SHAREHOLDERSAND SHARE MARKET
(DKK per share)
Total to shareholders
Acquisition treasury shares
Total dividend
(DKK million)
Dividend yield (%)
End-of-year price
Dividend
32363648113
4880*) 64
2828284849
2.4%2.2%2.3%3.6%2.0%
187.6202.6198.1206.9375.0
4.54.54.57.57.5
19992000200120022003
’) Period until the Annual General Meeting in April 2004
Shareholder mix 2004
11%
24%
2%
20%5%
6%
9%
10%
7%
6%
Danske BankLDATPFidelityPFAOther Danish InstitutionalOther foreign inv.Danish retailEmployeesNot registered
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Shareholder Information
PRICE DEVELOPMENT AND REVENUE
Peer Group comprising Carlsberg, HeinekenScottish & Newcastle, SABMiller and Interbrew.
01-01-2001 to 16-11-2004
0
25
50
75
100
125
150
175
200
225
250
29-12-2000
24-04-2001
13-08-2001
26-11-2001
18-03-2002
15-07-2002
04-11-2002
27-02-2003
17-06-2003
30-09-2003
20-01-2004
10-05-2004
25-08-2004
Bryggerigruppen BRYGGERIGRUPPEN PEERS KFX (DK)
Thousand shares (01-03-2002 to 16-11-2004)
0
50
100
150
200
250
300
350
400
450
500
550
600
27-03-2002
28-06-2002
30-09-2002
30-12-2002
31-03-2003
30-06-2003
30-09-2003
30-12-2003
31-03-2004
30-06-2004
30-09-2004
Volume (Thousands)
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The statements about the future made in the Q3 Report2004 reflect Management’s expectations in respect offuture events and financial results, as well as of eco-nomic trends in key markets and developments in in-ternational money, foreign exchange and interest ratemarkets. Statements about the future will inherently in-volve uncertainty as they may be influenced by - in ad-dition to global economic conditions - e.g. marketdriven price reductions, market acceptance of newproducts, unforeseen termination of business relation-ships, changes in regulatory aspects (duties, environ-ment, packaging and containers).
Disclosure
STATEMENTS ABOUT THE FUTURE
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Bryggerigruppen A/S (The Danish Brewery Group A/S)Faxe Allé 1DK-4640 FakseDenmarkTelephone: +45 56 77 15 00Facsimile: +45 56 71 47 64
Home page: www.bryggerigruppen.dkwww.brewerygroup.com
E-mail: [email protected]
Executive Board:Poul Møller CEOConnie Astrup-Larsen International Director Eastern and Central EuropePovl Friis Technical DirectorLeif Rasmussen Sales and Marketing DirectorUlrik Sørensen CFO